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Commitment and Contingencies | 12 Months Ended
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Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Litigation The nature of the operations of the Company's hotels exposes those hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. IHM is currently a defendant in several class action lawsuits pending in the state of California. The first class action lawsuit was filed in the Santa Clara County Superior Court on October 21, 2016 under the title Ruffy, et al, v. Island Hospitality Management, LLC, et al. Case No. 16-CV-301473 (“Ruffy”) and the second class action lawsuit was filed on March 21, 2018 under the title Doonan, et al, v. Island Hospitality Management, LLC, et al. Case No 18-CV-325187 (“Doonan”). The class actions relate to hotels operated by IHM in the state of California and owned by affiliates of the Company and the NewINK JV, and/or certain third parties. The complaint alleges various wage and hour law violations based on alleged misclassification of certain hotel managerial staff and violation of certain California statutes regarding incorrect information contained on employee paystubs. The plaintiffs seek injunctive relief, money damages, penalties, and interest. A settlement agreement has been negotiated and approved by the applicable courts for Ruffy and Doonan. As of December 31, 2019, included in accounts payable and accrued expenses is $0.1 million which represents an estimate of the Company’s total exposure to the Ruffy and Doonan litigations based on standard indemnification obligations under hotel management agreements with IHM. In addition, IHM is a defendant in the following series of interrelated class action lawsuits: Perez et al. v. Island Hospitality Management III LLC et al. (United States District Court for the Central District of California, Case No. 2:18-cv-04903-DMG-JPR) filed on March 15, 2018, Cruz v. Island Hospitality Management III LLC (Santa Clara County Superior Court Case No. 19CV353655) filed on August 19, 2019, Leon et al. v. Island Hospitality Management III LLC (Orange County Superior Court Case No. 30-2019-01050719-CU-OE-CXC) filed on April 2, 2019, and Vela v. Island Hospitality Management LLC et al. (San Diego County Superior Court, Case No. 37-2019-0003525) filed on July 9, 2019 (collectively the “Perez class actions”). The Perez class actions also relate to hotels operated by IHM in the state of California and owned by affiliates of the Company and the NewINK JV, and/or certain third parties. The complaints allege various wage and hour law violations based on alleged violation of certain California statutes regarding rest and meal breaks and wage statements. The plaintiffs seek injunctive relief, money damages, penalties, and interest. Settlement agreements have been negotiated and currently await approval by the applicable courts. As of December 31, 2019, included in accounts payable and accrued expenses is $0.6 million which represents an estimate of the Company’s total exposure to the Perez class actions based on standard indemnification obligations under hotel management agreements with IHM. Management Agreements The management agreements with IHM have an initial term of five years and automatically renew for two five-year periods unless IHM provides written notice to us no later than 90 days prior to the then current term's expiration date of their intent not to renew. The IHM management agreements provide for early termination at the Company’s option upon sale of any IHM-managed hotel for no termination fee, with six months advance notice. The IHM management agreements may be terminated for cause, including the failure of the managed hotel to meet specified performance levels. Base management fees are calculated as a percentage of the hotel's gross room revenue. If certain financial thresholds are met or exceeded, an incentive management fee is calculated as 10% of the hotel's net operating income less fixed costs, base management fees and a specified return threshold. The incentive management fee is capped at 1% of gross hotel revenues for the applicable calculation. As of December 31, 2019, terms of the Company's management agreements are (dollars are not in thousands):
Property | Management Company | Base Management Fee | Monthly Accounting Fee | Monthly Revenue Management Fee | Incentive Management Fee Cap
Homewood Suites by Hilton Boston-Billerica/ Bedford/ Burlington | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Minneapolis-Mall of America | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Nashville-Brentwood | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Dallas-Market Center | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Hartford-Farmington | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Orlando-Maitland | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hampton Inn & Suites Houston-Medical Center | IHM | 3.0 | % | 1,000 |  | 1,000 |  | 1.0 | %
Residence Inn Long Island Holtsville | IHM | 3.0 | % | 1,000 |  | 1,000 |  | 1.0 | %
Residence Inn White Plains | IHM | 3.0 | % | 1,000 |  | 750 |  | 1.0 | %
Residence Inn New Rochelle | IHM | 3.0 | % | 1,000 |  | 750 |  | 1.0 | %
Residence Inn Garden Grove | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Mission Valley | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton San Antonio River Walk | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Washington DC | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Tysons Corner | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hampton Inn Portland Downtown | IHM | 3.0 | % | 1,000 |  | 550 |  | 1.0 | %
Courtyard Houston | IHM | 3.0 | % | 1,000 |  | 550 |  | 1.0 | %
Hyatt Place Pittsburgh North Shore | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Hampton Inn Exeter | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Denver Tech | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn Bellevue | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Springhill Suites Savannah | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Silicon Valley I | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Silicon Valley II | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn San Mateo | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Mountain View | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hyatt Place Cherry Creek | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard Addison | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard West University Houston | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn West University Houston | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Burlington | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn San Diego Gaslamp | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Marina del Rey | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn Dedham | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Il Lugano | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Portsmouth | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard Summerville | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Embassy Suites Springfield | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn Summerville | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard Dallas | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Management fees totaled approximately $10.8 million, $10.8 million and $9.9 million, respectively, for the years ended December 31, 2019, 2018 and 2017. Incentive management fees paid to IHM for the years ended years ended December 31, 2019, 2018 and 2017 were $0.1 million, $0.1 million and $0.2 million, respectively. Franchise Agreements The fees associated with the franchise agreements are calculated as a specified percentage of the hotel's gross room revenue. Terms of the Company's franchise agreements are as of December 31, 2019:
Property |  | Franchise/Royalty Fee | Marketing/Program Fee | Expiration
Homewood Suites by Hilton Boston-Billerica/ Bedford/ Burlington |  | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Minneapolis-Mall of America |  | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Nashville-Brentwood |  | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Dallas-Market Center |  | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Hartford-Farmington |  | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Orlando-Maitland |  | 4.0 | % | 4.0 | % | 2025
Hampton Inn & Suites Houston-Medical Center |  | 5.0 | % | 4.0 | % | 2035
Courtyard Altoona |  | 5.5 | % | 2.0 | % | 2030
Springhill Suites Washington |  | 5.0 | % | 2.5 | % | 2030
Residence Inn Long Island Holtsville |  | 5.5 | % | 2.5 | % | 2025
Residence Inn White Plains |  | 5.5 | % | 2.5 | % | 2030
Residence Inn New Rochelle |  | 5.5 | % | 2.5 | % | 2030
Residence Inn Garden Grove |  | 5.0 | % | 2.5 | % | 2031
Residence Inn Mission Valley |  | 5.0 | % | 2.5 | % | 2031
Homewood Suites by Hilton San Antonio River Walk |  | 4.0 | % | 4.0 | % | 2026
Residence Inn Washington DC |  | 5.5 | % | 2.5 | % | 2033
Residence Inn Tysons Corner |  | 5.0 | % | 2.5 | % | 2031
Hampton Inn Portland Downtown |  | 6.0 | % | 4.0 | % | 2032
Courtyard Houston |  | 5.5 | % | 2.0 | % | 2030
Hyatt Place Pittsburgh North Shore |  | 5.0 | % | 3.5 | % | 2030
Hampton Inn Exeter |  | 6.0 | % | 4.0 | % | 2031
Hilton Garden Inn Denver Tech |  | 5.5 | % | 4.3 | % | 2028
Residence Inn Bellevue |  | 5.5 | % | 2.5 | % | 2033
Springhill Suites Savannah |  | 5.0 | % | 2.5 | % | 2033
Residence Inn Silicon Valley I |  | 5.5 | % | 2.5 | % | 2029
Residence Inn Silicon Valley II |  | 5.5 | % | 2.5 | % | 2029
Residence Inn San Mateo |  | 5.5 | % | 2.5 | % | 2029
Residence Inn Mountain View |  | 5.5 | % | 2.5 | % | 2029
Hyatt Place Cherry Creek |  | 3% to 5% | 3.5 | % | 2034
Courtyard Addison |  | 5.5 | % | 2.0 | % | 2029
Courtyard West University Houston |  | 5.5 | % | 2.0 | % | 2029
Residence Inn West University Houston |  | 6.0 | % | 2.5 | % | 2024
Hilton Garden Inn Burlington |  | 5.5 | % | 4.3 | % | 2029
Residence Inn San Diego Gaslamp |  | 6.0 | % | 2.5 | % | 2035
Hilton Garden Inn Marina del Rey |  | 3% to 5.5% | 4.3 | % | 2030
Residence Inn Dedham |  | 6.0 | % | 2.5 | % | 2030
Residence Inn Il Lugano |  | 3% to 6% | 2.5 | % | 2045
Hilton Garden Inn Portsmouth |  | 5.5 | % | 4.0 | % | 2037
Courtyard Summerville |  | 6.0 | % | 2.5 | % | 2037
Embassy Suites Springfield |  | 5.5 | % | 4.0 | % | 2037
Residence Inn Summerville |  | 6.0 | % | 2.5 | % | 2038
Courtyard Dallas |  | 4% to 6% | 2.0 | % | 2038
Franchise and marketing/program fees totaled approximately $25.9 million, $24.9 million and $23.2 million, respectively, for the years ended December 31, 2019, 2018 and 2017.

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