Investments in Affiliates

12 Months Ended

Dec. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

The Company has equity method investments in affiliates primarily related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets.

As of December 31, 2023 and 2022, the Company had total investments in affiliates in the consolidated balance sheets of $70.6 million and $30.6 million, respectively, which included investments in affiliates that represent VIEs of $59.4 million and $24.5 million, respectively. The Company has determined that it is not the primary beneficiary of any of these VIEs, however the

Company does exercise significant influence through its equity ownership and as a result, the investments in these affiliates are accounted for under the equity method of accounting. During the years ended December 31, 2023, 2022, and 2021, the Company recognized losses totaling $3.4 million, $3.7 million, and $18.9 million, respectively, from these investment that represent VIEs. The Company's maximum exposure to losses related to its investments in the VIEs is limited to the total of its respective equity investment as well as certain limited payment guaranties, which are described in Note 23 of these consolidated financial statements.

The Company recognized no impairment charges during the year ended December 31, 2023. During the years ended December 31, 2022 and 2021, the Company recognized impairment charges of $0.2 million and $19.3 million, respectively, related to certain equity method investments. The Company estimated the fair value of each investment on an individual basis and derived the fair value from a combination of observable prices from offers received for either the underlying collateral or the ownership interest of the unconsolidated affiliate, comparable market transactions, and DCF techniques to project the cash flows for the investment based upon the underlying property. There are judgments and assumptions in each of these fair value determinations, including our selection of comparable market transactions, the amount and timing of the expected future cash flows, long-term growth rates, and sales capitalization rates. These nonrecurring fair value measurements are classified as level three in the fair value measurement hierarchy, as the Company utilized unobservable inputs which are significant to the overall fair value. Based on these analyses, in each case the Company determined that the fair value declined below the carrying value and the decline is other-than-temporary. As a result, the Company recognized an impairment charge equal to the difference between the carrying value and the estimated fair value for each investment.

During the years ended December 31, 2023 and 2021, the Company received distributions of $0.9 million and $15.6 million, respectively, from the sales of ownership interests or from the distributions from the sales of the underlying assets of the affiliates, which resulted in no net gains (losses) and a $6.9 million net gain, respectively. The Company received no distributions and therefore recognized no net gains (losses) during the year ended December 31, 2022.

The Company's ownership interests in its affiliates were as follows:


	Ownership Interest
	December 31, 2023		December 31, 2022
Choice Hotels Canada, Inc.(1)	50	%	50	%
Main Street WP Hotel Associates, LLC	50	%	50	%
CS Hotel West Orange, LLC	50	%	50	%
City Market Hotel Development, LLC	43	%	43	%
CS Woodlands, LLC (2)	—	%	50	%
926 James M. Wood Boulevard, LLC	75	%	75	%
EH Glendale JV LLC	80	%	—	%
CS Lakeside Santa Clara LLC	50	%	50	%
BL 219 Holdco, LP	50	%	50	%
Integrated 32 West Randolph LLC	20	%	20	%
EH Nampa JV LLC	80	%	80	%
Radisson Hotel La Crosse (1)	14	%	14	%
EH Cheyenne JV LLC	80	%	—	%
EH Waco JV LLC	80	%	—	%
EH Amarillo JV LLC	80	%	—	%
EH Yuma JV LLC	80	%	—	%
EH El Paso JV LLC	80	%	—	%
EH Brownsville JV LLC	80	%	—	%

(1) Non-VIE investments.

(2) During the year ended December 31, 2023, the Company received distributions resulting from the sale of the underlying assets of the affiliate.

The following tables present summarized financial information for all of the unconsolidated joint ventures in which the Company holds an investment in affiliate that is accounted for under the equity method of accounting:


	Year Ended December 31,
(in thousands)	2023		2022		2021
Revenues	$	65,634	$	58,821	$	35,514
Operating income	$	12,504	$	7,977	$	2,299
Income (loss) from continuing operations	$	314	$	1,837	$	(5,227)
Net loss	$	(1,255)	$	(1,058)	$	(1,593)


	As of December 31,
(in thousands)	2023		2022
Current assets	$	63,397	$	39,870
Non-current assets	269,693		237,347
Total assets	$	333,090	$	277,217

Current liabilities	$	63,526	$	38,660
Non-current liabilities	177,451		181,894
Total liabilities	$	240,977	$	220,554