Investment in Unconsolidated Entity

3 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated EntityOpenKey, Inc. (“OpenKey”), which is controlled and consolidated by Ashford Inc., is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms. As of March 31, 2023, the Company has made equity investments in OpenKey totaling $2.9 million. All investments were

recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors.

Our investment is recorded as “investment in unconsolidated entity” in our condensed consolidated balance sheets and is accounted for under the equity method of accounting as we have significant influence over the entity under the applicable accounting guidance. We review our investment in OpenKey for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of the investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. No such impairment was recorded for the three months ended March 31, 2023 and 2022.

The following table summarizes our carrying value and ownership interest in OpenKey:


	March 31, 2023			December 31, 2022
Carrying value of the investment in OpenKey (in thousands)	$	1,615		$	1,689
Ownership interest in OpenKey	7.9		%	7.9		%

The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):


	Three Months Ended March 31,
Line Item		2023		2022
Equity in earnings (loss) of unconsolidated entity		$	(74)	$	(72)

On February 2, 2023, the Company entered into a loan funding agreement with Ashford Inc. and OpenKey. Per the agreement, Ashford Inc. and the Company will provide OpenKey with a maximum loan amount of $5.0 million to be allocated on a pro-rata basis based on current ownership interests and funded quarterly, over the course of 2023. The loan bears interest at an annual rate of 15%. Additionally, repayment of the loan principal and all accrued interest is due upon certain events. On February 3, 2023, the Company funded approximately $99,000.

The following table summarizes our note receivable from OpenKey (in thousands):


Line Item	March 31, 2023		December 31, 2022
Investment in unconsolidated entity	$	100	$	—

The following table summarizes the interest income associated with the loan to OpenKey (in thousands):


	Three Months Ended March 31,
Line Item		2023
Equity in earnings (loss) of unconsolidated entity		$	1