XML 35 R20.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Relationship with Managers | 12 Months Ended
--- | ---
Dec. 31, 2015
Relationships with Managers [Abstract] |
Relationships With Managers | Relationships with Managers We are party to hotel management agreements for each of our hotels owned. The following table sets forth the agreement date, initial term and number of renewal terms under the respective hotel management agreements for each of our hotels. Generally, the term of the hotel management agreements renew automatically for a negotiated number of consecutive periods upon the expiration of the initial term unless the property manager gives notice to us of its election not to renew the hotel management agreement.
Property |  | Manager |  | Date of Agreement |  | Initial Term |  | Number of Renewal Terms
Atlanta Alpharetta Marriott |  | Marriott |  | 9/2000 |  | 30 years |  | Two ten-year periods
Bethesda Marriott Suites |  | Marriott |  | 12/2004 |  | 21 years |  | Two ten-year periods
Boston Westin Waterfront |  | Starwood |  | 5/2004 |  | 20 years |  | Four ten-year periods
Chicago Marriott Downtown |  | Marriott |  | 3/2006 |  | 32 years |  | Two ten-year periods
Courtyard Denver Downtown |  | Sage Hospitality |  | 7/2011 |  | 5 years |  | One five-year period
Courtyard Manhattan/Fifth Avenue |  | Marriott |  | 12/2004 |  | 30 years |  | None
Courtyard Manhattan/Midtown East |  | Marriott |  | 11/2004 |  | 30 years |  | Two ten-year periods
Frenchman's Reef & Morning Star Marriott Beach Resort |  | Marriott |  | 9/2000 |  | 30 years |  | Two ten-year periods
The Gwen Chicago |  | Crescent Hotels & Resorts (1) |  | 9/2015 |  | 10 years |  | None
Hilton Boston Downtown |  | Davidson Hotels & Resorts |  | 11/2012 |  | 7 years |  | Two five-year periods
Hilton Burlington |  | Interstate Hotels & Resorts |  | 12/2010 |  | 5 years |  | Month-to-month
Hilton Garden Inn Chelsea/New York City |  | HEI Hotels & Resorts (2) |  | 9/2015 |  | 10 years |  | None
Hilton Garden Inn New York City/Times Square Central |  | Highgate Hotels |  | 1/2011 |  | 10 years |  | One five-year period
Hilton Minneapolis |  | Hilton |  | 3/2006 |  | 20 ¾ years |  | None
Hotel Rex |  | Joie de Vivre Hotels |  | 9/2005 |  | 5 years |  | Month-to-month
Inn at Key West |  | Noble House Hotels & Resorts (3) |  | 9/2015 |  | 10 years |  | Two five-year periods
JW Marriott Denver at Cherry Creek |  | Sage Hospitality |  | 5/2011 |  | 5 years |  | One five-year period
Lexington Hotel New York |  | Highgate Hotels |  | 6/2011 |  | 10 years |  | One five-year period
Orlando Airport Marriott |  | Marriott |  | 11/2005 |  | 30 years |  | None
Renaissance Charleston |  | Marriott |  | 1/2000 |  | 21 years |  | Two five-year periods
Renaissance Worthington |  | Marriott |  | 9/2000 |  | 30 years |  | Two ten-year periods
Salt Lake City Marriott Downtown |  | Marriott |  | 12/2001 |  | 30 years |  | Three fifteen-year periods
Sheraton Suites Key West |  | Ocean Properties |  | 6/2015 |  | 12 years |  | None
Shorebreak Hotel |  | Kimpton Hotel & Restaurant Group |  | 2/2015 |  | 10 years |  | None
The Lodge at Sonoma, a Renaissance Resort & Spa |  | Marriott |  | 10/2004 |  | 20 years |  | One ten-year period
Vail Marriott Mountain Resort & Spa |  | Vail Resorts |  | 6/2005 |  | 15½ years |  | None
Westin Fort Lauderdale Beach Resort |  | HEI Hotels & Resorts |  | 12/2014 |  | 10 years |  | None
Westin San Diego |  | Interstate Hotels & Resorts |  | 12/2010 |  | 5 years |  | Month-to-month
Westin Washington D.C. City Center |  | HEI Hotels & Resorts (4) |  | 4/2015 |  | 10 years |  | None
______________
(1) | Crescent Hotels & Resorts assumed management of the hotel in September 2015. The hotel was previously managed by Hilton.
(2) | HEI Hotels & Resorts assumed management of the hotel in September 2015. The hotel was previously managed by Alliance Hospitality Management.
(3) | Noble House Hotels & Resorts assumed management of the hotel in September 2015. The hotel was previously managed by Remington Hotels.
(4) | HEI Hotels & Resorts assumed management of the hotel in April 2015. The hotel was previously managed by Interstate Hotels & Resorts.
Under our hotel management agreements, the hotel manager receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee. The base management fee is generally payable as a percentage of gross hotel revenues for each fiscal year. The incentive management fee is generally based on hotel operating profits, but the fee only applies to that portion of hotel operating profits above a negotiated return on our invested capital, which we refer to as the owner's priority. We refer to this excess of operating profits over the owner's priority as “available cash flow.” The following table sets forth the base management fee, incentive management fee and FF&E reserve contribution, generally due and payable each fiscal year, for each of our properties:
Property |  | Base Management Fee(1) |  |  | Incentive Management Fee(2) |  |  | FF&E Reserve Contribution(1) |  |
Atlanta Alpharetta Marriott |  | 3 | % |  | 25 | % |  | 5 | % |
Bethesda Marriott Suites |  | 3 | % |  | 50 | % | (3) | 5 | % | (4)
Boston Westin Waterfront |  | 2.5 | % |  | 20 | % |  | 4 | % |
Chicago Marriott Downtown |  | 3 | % |  | 18 | % | (5) | 5 | % |
Courtyard Denver Downtown |  | 2 | % | (6) | 10 | % |  | 4 | % |
Courtyard Manhattan/Fifth Avenue |  | 6 | % |  | 25 | % |  | 4 | % |
Courtyard Manhattan/Midtown East |  | 5 | % |  | 25 | % |  | 4 | % |
Frenchman's Reef & Morning Star Marriott Beach Resort |  | 3 | % |  | 15 | % |  | 5.5 | % |
The Gwen Chicago |  | 1 | % | (7) | 15 | % |  | 4 | % |
Hilton Boston Downtown |  | 2 | % |  | 10 | % |  | 4 | % |
Hilton Burlington |  | 1.5 | % | (8) | 10 | % |  | — |  |
Hilton Garden Inn Chelsea/New York City |  | 2.25 | % | (9) | 15 | % |  | 4 | % |
Hilton Garden Inn New York City/Times Square Central |  | 3 | % | (10) | 15 | % |  | 4 | % |
Hilton Minneapolis |  | 3 | % |  | 15 | % |  | 4 | % |
Hotel Rex |  | 3 | % |  | 10 | % |  | 4 | % |
Inn at Key West |  | 3 | % |  | 15 | % |  | 4 | % |
JW Marriott Denver at Cherry Creek |  | 2.25 | % | (11) | 10 | % |  | 4 | % |
Lexington Hotel New York |  | 3 | % |  | 20 | % |  | 4 | % |
Orlando Airport Marriott |  | 3 | % |  | 25 | % |  | 5 | % |
Renaissance Charleston |  | 2.5 | % | (12) | 20 | % |  | 5 | % |
Renaissance Worthington |  | 3 | % |  | 25 | % |  | 5 | % |
Salt Lake City Marriott Downtown |  | 3 | % |  | 20 | % |  | 5 | % |
Sheraton Suites Key West |  | 3 | % |  | 10 | % |  | 4 | % |
Shorebreak Hotel |  | 1.25 | % | (13 | ) | 15 | % |  | 4 | % |
The Lodge at Sonoma, a Renaissance Resort & Spa |  | 3 | % |  | 20 | % |  | 5 | % |
Vail Marriott Mountain Resort & Spa |  | 3 | % |  | 20 | % |  | 4 | % |
Westin Fort Lauderdale Beach Resort |  | 2.25 | % | (14) | 15 | % |  | 4 | % |
Westin San Diego |  | 1.5 | % | (8) | 10 | % |  | 4 | % |
Westin Washington D.C. City Center |  | 2 | % | (15) | 15 | % |  | 4 | % |
______________
(1) | As a percentage of gross revenues.
(2) | Based on a percentage of hotel operating profits above a specified return on our invested capital or specified operating profit thresholds.
(3) | The owner's priority expires in 2027.
(4) | The contribution is reduced to 1% until operating profits exceed an owner's priority of $3.9 million.
(5) | Effective April 2015, calculated as 18% of net operating income. There is no owner's priority; however, the Company's contribution to the hotel's multi-year guest room renovation is treated as a deduction in calculating net operating income. Prior to April 2015, calculated as 20% of net operating income before base management fees.
(6) | The base management fee is 2.5% of gross revenues if the hotel achieves operating results in excess of 7% of our invested capital and 3% of gross revenues if the hotel achieves operating profits in excess of 8% of our invested capital.
(7) | The base management fee increases to 1.25% for 2017 and 1.5% for 2018 through the remainder of the term.
(8) Total management fees are capped at 2.5% of gross revenues. (9) The base management fee increases to 2.5% beginning June 4, 2016 through the remainder of the term. (10) The base management fee increased to 3% from 2.5% beginning September 1, 2015.
(11) | The base management fee is 2.75% of gross revenues if the hotel achieves operating profits in excess of 7% of our invested capital and 3.25% of gross revenues if the hotel achieves operating profits in excess of 8% of our invested capital.
(12) | The base management fee decreased to 2.5% beginning September 2015 and will increase to 3.0% beginning September 2016 and 3.5% beginning September 2017 through the remainder of the term.
(13) The base management fee increases to 2.5% beginning January 1, 2016. (14) The base management fee decreases to 2% beginning January 1, 2017. (15) The base management fee decreases to 2% beginning January 1, 2017. Between April 2015 and April 2016, the base fee may be reduced if the hotel does not meet a specified operating profit threshold, subject to a floor of 1% of gross revenues. The following is a summary of management fees from continuing operations for the years ended December 31, 2015, 2014 and 2013 (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Base management fees | $ | 23,228 |  |  | $ | 21,473 |  |  | $ | 19,324 |
Incentive management fees | 7,405 |  |  | 8,554 |  |  | 6,222 |
Total management fees | $ | 30,633 |  |  | $ | 30,027 |  |  | $ | 25,546 |
Seven of our hotels earned incentive management fees for the year ended December 31, 2015. Ten of our hotels earned incentive management fees for the year ended December 31, 2014. Eight of our hotels earned incentive management fees for the year ended December 31, 2013. Performance Termination Provisions Our management agreements provide us with termination rights upon a manager's failure to meet certain financial performance criteria and manager's decision not to cure the failure by making a cure payment. Key Money Our managers and franchisors have contributed to us certain amounts in exchange for the right to manage or franchise hotels we have acquired and in connection with the completion of certain brand enhancing capital projects. We refer to these amounts as “key money.” Key money is classified as deferred income in the accompanying consolidated balance sheets and amortized against management fees or franchise fees on the accompanying consolidated statements of operations. During 2015, Starwood provided us with $3.0 million of key money in connection with our renovation associated with the brand conversion of the hotel formerly known as the Conrad Chicago to The Gwen, a Luxury Collection Hotel. The key money will be amortized against franchise fees over the anticipated period of the renovation--January 2016 through April 2017. We amortized $1.0 million of key money during the year ended December 31, 2015, $1.1 million during the year ended December 31, 2014, and $2.2 million during the year ended December 31, 2013. The amortization for the year ended December 31, 2013 includes $1.1 million of key money written off as a result of the change of hotel manager of the Oak Brook Hills Resort during 2013. This key money write-off is included within other hotel expenses on the accompanying consolidated statement of operations. In connection with the sale of the Los Angeles Airport Marriott on December 18, 2014, we wrote off $1.1 million of unamortized key money. The key money write-off is included within the gain on sale of hotel properties, net on the accompanying consolidated statement of operations. Franchise Agreements The following table sets forth the terms of the hotel franchise agreements for our thirteen franchised hotels:
|  | Date of Agreement |  | Term |  | Franchise Fee
Vail Marriott Mountain Resort & Spa |  | 6/2005 |  | 16 years |  | 6% of gross room sales plus 3% of gross food and beverage sales
Hilton Garden Inn Chelsea/New York City |  | 9/2010 |  | 17 years |  | 5% of gross room sales and 4.3% of gross room sales
JW Marriott Denver at Cherry Creek |  | 5/2011 |  | 15 years |  | 6% of gross room sales and 3% of gross food and beverage sales
Lexington Hotel New York |  | 3/2012 |  | 20 years |  | 3% of gross room sales (1)
Courtyard Denver Downtown |  | 7/2011 |  | 16 years |  | 5.5% of gross room sales
Hilton Boston Downtown |  | 7/2012 |  | 10 years |  | 5% of gross room sales and 3% of gross food and beverage sales; program fee of 4% of gross room sales
Westin Washington D.C. City Center |  | 12/2010 |  | 20 years |  | 7% of gross room sales and 3% of gross food and beverage sales
Westin San Diego |  | 12/2010 |  | 20 years |  | 7% of gross room sales and 3% of gross food and beverage sales
Hilton Burlington |  | 7/2012 |  | 10 years |  | 5% of gross room sales and 3% of gross food and beverage sales; program fee of 4% of gross room sales
Hilton Garden Inn New York/Times Square Central |  | 6/2011 |  | 22 years |  | 3% of gross room sales (2); program fee of 4.3% of gross room sales
Westin Fort Lauderdale Beach Resort |  | 12/2014 |  | 20 years |  | 6% of gross room sales and 2% of gross food and beverage sales
The Gwen Chicago |  | 5/2015 |  | 20 years |  | 4.5% of gross room sales
Sheraton Suites Key West |  | 2/2006 (3) |  | 20 years |  | 5% of gross room sales
___________
(1) | Increased to 4% on the first anniversary of the agreement and to 5% on the second anniversary of the agreement.
(2) Increased to 4% on the first anniversary of the opening date, which was September 1, 2014, and increases to 5% on the second anniversary of the opening date.
(3) | We assumed the franchise agreement on June 30, 2015, the date of our purchase of the hotel.
We recorded $22.0 million, $15.3 million and $11.4 million of franchise fees during the fiscal years ended December 31, 2015, 2014, and 2013, respectively, which are included in other hotel expenses on the accompanying consolidated statements of operations.

X
- Definition Relationships with Managers [Abstract] + References No definition available. + Details
Name: | drh_RelationshipsWithManagersAbstract
Namespace Prefix: | drh_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Relationships with managers. + References No definition available. + Details
Name: | drh_RelationshipsWithManagersTextBlock
Namespace Prefix: | drh_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration