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Relationships with Managers and Franchisors | 12 Months Ended
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Dec. 31, 2020
Relationships With Managers [Abstract] |
Relationships with Managers and Franchisors | Relationships with Managers and Franchisors We are party to hotel management agreements for each of our hotels owned. 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 is a summary of management fees for the years ended December 31, 2020, 2019 and 2018 (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Base management fees | $ | 6,908 |  |  | $ | 21,712 |  |  | $ | 20,467 |
Incentive management fees | — |  |  | 5,705 |  |  | 5,805 |
Amortization of deferred income related to key money | (227) |  |  | (227) |  |  | (2,398) |
Amortization of unfavorable contract liabilities | (3,103) |  |  | (1,715) |  |  | (1,715) |
Total management fees, net | $ | 3,578 |  |  | $ | 25,475 |  |  | $ | 22,159 |
None of our hotels earned incentive management fees for the year ended December 31, 2020. Eight of our hotels earned incentive management fees for the year ended December 31, 2019. Nine of our hotels earned incentive management fees for the year ended December 31, 2018. 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. We amortized $0.4 million of key money during the year ended December 31, 2020, $0.4 million during the year ended December 31, 2019, and $2.6 million during the year ended December 31, 2018. In connection with the termination of the management agreement for Frenchman's Reef, we accelerated the amortization of key money received from the hotel manager from the date of our notice of termination through the effective termination date of February 20, 2018. We recognized an additional $2.2 million of amortization of key money in connection with this acceleration during the year ended December 31, 2018. Franchise Agreements We have franchise agreements for 19 of our hotels as of December 31, 2020. Pursuant to these franchise agreements, we pay franchise fees based on a percentage of gross room sales, and, under certain agreements, a percentage based on gross food and beverage sales. Further, we pay certain other fees for marketing and reservation services. The following is a summary of franchise fees for the years ended December 31, 2020, 2019 and 2018 (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Franchise fees | $ | 10,301 |  |  | $ | 27,102 |  |  | $ | 26,348 |
Amortization of deferred income related to key money (1) | (170) |  |  | (170) |  |  | (170) |
Total franchise fees, net | $ | 10,131 |  |  | $ | 26,932 |  |  | $ | 26,178 |
_____________________________ (1)Relates to key money received for The Lexington Hotel. In January 2020, we entered into a franchise agreement with Marriott for the Westin Boston Waterfront. The franchise agreement expires in December 2026. In June 2020, our hotel formerly named the Sheraton Suites Key West became the Barbary Beach House Key West and is no longer subject to a franchise agreement. In August 2020, we entered into several agreements with Marriott covering a number of our properties as follows: •We terminated the existing management agreements with Marriott and entered into new franchise agreements with Marriott for the Atlanta Marriott Alpharetta, Salt Lake City Marriott, The Lodge at Sonoma Renaissance Resort & Spa, Renaissance Charleston Historic District Hotel, and Courtyard New York Manhattan/Fifth Avenue. The term of each of the new franchise agreements is generally equivalent to the term remaining under each of the management agreements that were terminated, including Marriott’s extension options. In connection with the change in hotel manager of the Renaissance Charleston Historic District Hotel, we recognized $1.4 million of accelerated amortization of the unfavorable management agreement liability. The accelerated amortization is included as a reduction to management fees on the accompanying consolidated statement of operations for the year ended December 31, 2020. •The franchise agreement for The Lodge at Sonoma Renaissance Resort & Spa provides us an option through July 2022 to convert the hotel to an Autograph Collection Hotel for the remaining franchise term. •We entered into a new franchise agreement for the Vail Marriott Mountain Resort to convert the brand to a Luxury Collection Hotel. The new franchise agreement has a term of 20 years, and the brand conversion will be effective upon the completion of an agreed-upon renovation. •The franchise agreement for The Lexington Hotel was amended to provide the Company with a right to terminate such agreement on or after April 2, 2021, subject to the payment of unamortized key money as of the date of termination and payment of a termination fee. •The franchise agreements for the JW Marriott Denver Cherry Creek, Westin Washington D.C. City Center and Westin San Diego Downtown were amended to extend the term of each agreement by 10 years. The amended franchise agreement for the JW Marriott Denver Cherry Creek provides the Company with an option to convert the hotel to a Luxury Collection Hotel, subject to the completion of a property improvement plan.

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