RLJ LODGING TRUST Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following discussion and analysis should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
report, as well as the information contained in our Annual Report, which is
accessible on the SEC's website at www.sec.gov.

Statement Regarding Forward-Looking Information


The following information contains certain statements, other than purely
historical information, including estimates, projections, statements relating to
our business plans, objectives and expected operating results, and the
assumptions upon which those statements are based, that are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements generally are
identified by the use of the words "believe," "project," "expect," "anticipate,"
"estimate," "plan," "may," "will," "will continue," "intend," "should," or
similar expressions.  Although we believe that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, beliefs
and expectations, such forward-looking statements are not predictions of future
events or guarantees of future performance and our actual results could differ
materially from those set forth in the forward-looking statements.
Currently, one of the most significant factors that could cause actual outcomes
to differ materially from our forward-looking statements is the continued
adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on
our financial condition, results of operations, cash flows and performance, the
real estate market and the global economy and
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financial markets. The extent to which the COVID-19 pandemic impacts us will
depend on future developments, which are highly uncertain and cannot be
predicted with certainty, including the duration of the pandemic and its impact
on the demand for travel and on levels of consumer confidence, the actions
governments, businesses and individuals take in response to the pandemic,
including limiting or banning travel, the impact of the COVID-19 pandemic and
actions taken in response to the pandemic on global and regional economies,
travel and economic activity, the speed and effectiveness of vaccine and
treatment developments and their deployment, including public adoption rates of
COVID-19 vaccines and booster shots, and their effectiveness against emerging
variants of COVID-19, and the pace of recovery when the COVID-19 pandemic
subsides, among others. Moreover, investors are cautioned to interpret many of
the risks identified under the section entitled "Risk Factors" in our Form 10-K
for the year ended December 31, 2021 as being heightened as a result of the
ongoing and numerous adverse impacts of the COVID-19 pandemic.

Additional factors that might cause such a difference include the following:
increased direct competition, changes in government regulations or accounting
rules, changes in local, national and global real estate conditions, declines in
the lodging industry, seasonality of the lodging industry, risks related to
natural disasters, such as earthquakes and hurricanes, hostilities, including
international military conflicts, future terrorist attacks or fear of
hostilities that affect travel, public health and/or economic activity and
epidemics and/or pandemics, including COVID-19, third-party operator risk,
change in operational costs, ramp up of the future economic recovery and
re-opening of hotels, our ability to obtain lines of credit or permanent
financing on satisfactory terms, changes in interest rates, inflation, duration
and access to capital through offerings of our common and preferred shares of
beneficial interest, or debt, our ability to identify suitable acquisitions, our
ability to close on identified acquisitions and integrate those businesses and
inaccuracies of our accounting estimates.  Given these uncertainties, undue
reliance should not be placed on such statements.

Except as required by law, we undertake no obligation to update or revise
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. We caution investors not to place undue reliance on
these forward-looking statements and urge investors to carefully review the
disclosures we make concerning risks and uncertainties in the sections entitled
"Forward-Looking Statements," "Risk Factors," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual Report,
as well as the risks, uncertainties and other factors discussed in this
Quarterly Report on Form 10-Q and identified in other documents filed by us with
the SEC.

Overview

We are a self-advised and self-administered Maryland REIT that owns primarily
premium-branded, high-margin, focused-service and compact full-service hotels.
We own a geographically diversified portfolio of hotels located in high-growth
urban markets that exhibit multiple demand generators and attractive long-term
growth prospects. We believe that our investment strategy allows us to generate
high levels of Revenue per Available Room ("RevPAR"), strong operating margins
and attractive returns.

Our strategy is to own primarily premium-branded, focused-service and compact
full-service hotels. Focused-service and compact full-service hotels typically
generate most of their revenue from room rentals, have limited food and beverage
outlets and meeting space, and require fewer employees than traditional
full-service hotels. We believe these types of hotels have the potential to
generate attractive returns relative to other types of hotels due to their
ability to achieve RevPAR levels at or close to those achieved by traditional
full-service hotels while achieving higher profit margins due to their more
efficient operating model and less volatile cash flows.

As of March 31, 2022, we owned 97 hotel properties with approximately 21,400
rooms, located in 22 states and the District of Columbia.  We owned, through
wholly-owned subsidiaries, a 100% interest in 95 of our hotel properties, a 95%
controlling interest in one hotel property, and a 50% non-controlling interest
in an entity owning one hotel property. We consolidate our real estate interests
in the 96 hotel properties in which we hold a controlling interest, and we
record the real estate interests in the one hotel property in which we hold a
50% non-controlling interest using the equity method of accounting. We lease 96
of the 97 hotel properties to our TRS, of which we own a controlling financial
interest.

For U.S. federal income tax purposes, we elected to be taxed as a REIT
commencing with our taxable year ended December 31, 2011. Substantially all of
our assets and liabilities are held by, and all of our operations are conducted
through our Operating Partnership. We are the sole general partner of the
Operating Partnership. As of March 31, 2022, we owned, through a combination of
direct and indirect interests, 99.5% of the units of limited partnership
interest in the OP units.




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COVID-19

The global outbreak of COVID-19 and the public health measures that have been
undertaken in response have had, and will likely continue to have, an impact on
the global economy and all aspects of our business. The effects of the COVID-19
pandemic could have lasting changes in consumer behavior that could create
headwinds for our hotel properties. Since we cannot estimate when the COVID-19
pandemic and the responsive measures to combat it will end, we cannot estimate
the ultimate operational and financial impact of the COVID-19 pandemic on our
business.

The effects of the COVID-19 pandemic have significantly impacted our operations,
and combined with macroeconomic trends such as reduced business spending,
including on travel, and increased unemployment, lead us to believe that the
ongoing effects of the COVID-19 pandemic on our operations will continue to have
a material impact on our financial results and liquidity.

2022 Significant Activities


Our significant activities reflect our commitment to creating long-term
shareholder value through enhancing our hotel portfolio's quality, recycling
capital and maintaining a prudent capital structure. The following significant
activities have taken place in 2022:

•Paid off the $200.0 million outstanding balance on our Revolver using cash on
hand.

•Sold two hotel properties for a combined sales price of approximately
$50.0 million.

•Exercised a one-year extension option on a mortgage loan extending the maturity
to April 2023.

•Approved a new share repurchase program and completed a credit facility
amendment to allow for repurchases of our shares.

Our Customers


The majority of our hotels consist of premium-branded, focused-service and
compact full-service hotels. As a result of this property profile, the majority
of our customers are transient in nature. Transient business typically
represents individual business or leisure travelers. The majority of our hotels
are located in business districts within major metropolitan areas. Accordingly,
business travelers represent the majority of the transient demand at our hotels.
As a result, macroeconomic factors impacting business travel have a greater
effect on our business than factors impacting leisure travel.

Group business is typically defined as a minimum of 10 guestrooms booked
together as part of the same piece of business. Group business may or may not
use the meeting space at any given hotel. Given the limited meeting space at the
majority of our hotels, group business that utilizes meeting space represents a
small component of our customer base.

A number of our hotel properties are affiliated with brands marketed toward
extended-stay customers. Extended-stay customers are generally defined as those
staying five nights or longer.

Our Revenues and Expenses


Our revenues are primarily derived from the operation of hotels, including the
sale of rooms, food and beverage revenue and other revenue, which consists of
parking fees, resort fees, gift shop sales and other guest service fees.

Our operating costs and expenses consist of the costs to provide hotel services,
including room expense, food and beverage expense, management and franchise fees
and other operating expenses. Room expense includes housekeeping and front
office wages and payroll taxes, reservation systems, room supplies, laundry
services and other costs. Food and beverage expense primarily includes the cost
of food, the cost of beverages and the associated labor costs. Other operating
expenses include labor and other costs associated with the other operating
department revenue, as well as labor and other costs associated with
administrative departments, sales and marketing, repairs and maintenance and
utility costs. Our hotels that are subject to franchise agreements are charged a
royalty fee, plus additional fees for marketing, central reservation systems and
other franchisor costs, in order for the hotel properties to operate under the
respective brands. Franchise fees are based on a percentage of room revenue and
for certain hotels additional franchise fees are charged for food and beverage
revenue. Our hotels are managed by independent, third-party management companies
under long-term agreements pursuant to which the management companies typically
earn base and incentive management fees based on the levels of revenues and
profitability of
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each individual hotel property. We generally receive a cash distribution from
the management companies on a monthly basis, which reflects hotel-level sales
less hotel-level operating expenses.

Key Indicators of Financial Performance


We use a variety of operating, financial and other information to evaluate the
operating performance of our business. These key indicators include financial
information that is prepared in accordance with GAAP as well as other financial
measures that are non-GAAP measures. In addition, we use other information that
may not be financial in nature, including industry standard statistical
information and comparative data. We use this information to measure the
operating performance of our individual hotels, groups of hotels and/or business
as a whole. We also use these metrics to evaluate the hotels in our portfolio
and potential acquisition opportunities to determine each hotel's contribution
to cash flow and its potential to provide attractive long-term total returns.
The key indicators include:

•Average Daily Rate (“ADR”)

•Occupancy

•RevPAR


ADR, Occupancy and RevPAR are commonly used measures within the lodging industry
to evaluate operating performance. RevPAR is an important statistic for
monitoring operating performance at the individual hotel property level and
across our entire business. We evaluate individual hotel RevPAR performance on
an absolute basis with comparisons to budget and prior periods, as well as on a
regional and company-wide basis. ADR and RevPAR include only room revenue.

We also use non-GAAP measures such as FFO, Adjusted FFO, EBITDA, EBITDAre and
Adjusted EBITDA to evaluate the operating performance of our business. For a
more in depth discussion of the non-GAAP measures, please refer to the "Non-GAAP
Financial Measures" section.

Critical Accounting Policies and Estimates


The preparation of the financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities at the date of our financial statements and the reported
amounts of revenues and expenses during the reporting period. It is possible
that the actual amounts may differ significantly from these estimates and
assumptions. We evaluate our estimates, assumptions and judgments on an ongoing
basis, based on information that is available to us, our business and industry
experience, and various other matters that we believe are reasonable and
appropriate for consideration under the circumstances. Our Annual Report
contains a discussion of our critical accounting policies and estimates. There
have been no significant changes to our critical accounting policies and
estimates since December 31, 2021.

Results of Operations


At March 31, 2022 and 2021, we owned 97 and 102 hotel properties, respectively.
Based on when a hotel property is acquired, sold or closed for renovation, the
operating results for certain hotel properties are not comparable for the three
months ended March 31, 2022 and 2021.  The non-comparable properties include
eight hotel properties that were sold or otherwise disposed and three
acquisitions that were completed in 2021 and one disposition that was completed
in 2022.

COVID-19

During the three months ended March 31, 2022, we benefited from significant
growth in demand as the easing of government restrictions improved mobility and
overall confidence in travel. These trends, combined with our continuing
stringent cost containment initiatives, led to a significant improvement in our
results of operations for the three months ended March 31, 2022 over the same
period in the prior year.

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Comparison of the three months ended March 31, 2022 to the three months ended
March 31, 2021

                                                             For the three months ended March
                                                                           31,
                                                                 2022                2021             $ Change
                                                                           (amounts in thousands)
Revenues
Operating revenues
Room revenue                                                 $  205,779          $ 102,772          $ 103,007
Food and beverage revenue                                        20,901              6,242             14,659
Other revenue                                                    16,219             10,538              5,681
Total revenues                                                  242,899            119,552            123,347
Expenses
Operating expenses
Room expense                                                     53,828             29,427             24,401
Food and beverage expense                                        16,169              4,556             11,613
Management and franchise fee expense                             20,388              5,361             15,027
Other operating expense                                          68,654             49,120             19,534
Total property operating expenses                               159,039             88,464             70,575
Depreciation and amortization                                    46,865             46,943                (78)
Impairment losses                                                     -              5,946             (5,946)
Property tax, insurance and other                                22,513             20,081              2,432
General and administrative                                       14,134             10,800              3,334
Transaction costs                                                    62                 60                  2
Total operating expenses                                        242,613            172,294             70,319
Other income, net                                                 7,285                465              6,820
Interest income                                                     172                384               (212)
Interest expense                                                (24,561)           (27,895)             3,334
Gain on sale of hotel properties, net                             1,417              1,083                334

Loss before equity in income (loss) from unconsolidated
joint ventures

                                                  (15,401)           (78,705)            63,304

Equity in income (loss) from unconsolidated joint ventures 122

           (298)               420
Loss before income tax expense                                  (15,279)           (79,003)            63,724
Income tax expense                                                 (190)              (114)               (76)
Net loss                                                        (15,469)           (79,117)            63,648

Net loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership

                104                396               (292)
Noncontrolling interest in consolidated joint ventures              118                736               (618)

Net loss attributable to RLJ                                    (15,247)           (77,985)            62,738
Preferred dividends                                              (6,279)            (6,279)                 -
Net loss attributable to common shareholders                 $  (21,526)         $ (84,264)         $  62,738













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Revenues

Total revenues increased $123.3 million to $242.9 million for the three months
ended March 31, 2022 from $119.6 million for the three months ended March 31,
2021. The increase was the result of a $103.0 million increase in room revenue,
a $14.7 million increase in food and beverage revenue, and a $5.7 million
increase in other revenue.

Room Revenue


Room revenue increased $103.0 million to $205.8 million for the three months
ended March 31, 2022 from $102.8 million for the three months ended March 31,
2021.  The increase was the result of a $101.5 million increase in room revenue
attributable to the comparable properties, and a $1.5 million increase in room
revenue attributable to the non-comparable properties. The increase in room
revenue from the comparable properties was attributable to an increase in
RevPAR, including a significant increase in ADR, resulting from an increase in
demand over the prior period. The increase was also attributable to the impact
of hotels that were closed for all or a portion of the prior period being open
for the entirety of the current period. Though RevPAR increased over the
comparable period in 2021, it remained below the comparable period in 2019.

The following are the year-to-date key hotel operating statistics for the
comparable properties:

                                    For the three months ended March 31,
                                 2022                      2021           2019
               Occupancy           61.2   %                 44.6  %        76.4  %
               ADR         $     175.57                 $ 120.05       $ 189.87
               RevPAR      $     107.39                 $  53.54       $ 145.01



Food and Beverage Revenue

Food and beverage revenue increased $14.7 million to $20.9 million for the three
months ended March 31, 2022 from $6.2 million for the three months ended March
31, 2021 due to an increase in demand over the prior period. The increase was
also attributable to the impact of hotels that were closed for all or a portion
of the prior period being open for the entirety of the current period.

Other Revenue


Other revenue, which includes revenue derived from ancillary sources such as
parking fees, resort fees, gift shop sales and other guest service fees,
increased $5.7 million to $16.2 million for the three months ended March 31,
2022 from $10.5 million for the three months ended March 31, 2021.  The increase
in other revenue was primarily attributable to an increase in parking, resort
fees, and gift shop sales due to higher occupancy. Additionally, cancellation
fees increased due to the spread of the Omicron variant of COVID-19 in early
2022.

Property Operating Expenses

Property operating expenses increased $70.6 million to $159.0 million for the
three months ended March 31, 2022 from $88.5 million for the three months ended
March 31, 2021. The increase was due to a $71.1 million increase in property
operating expenses attributable to the comparable properties, which was
partially offset by a $0.6 million decrease in property operating expenses
attributable to the non-comparable properties.

The components of our property operating expenses for the comparable properties
were as follows (in thousands):

                                                     For the three months ended March
                                                                    31,
                                                         2022                 2021             $ Change
Room expense                                        $     52,279          $   27,944          $ 24,335
Food and beverage expense                                 15,747               4,470            11,277
Management and franchise fee expense                      19,770               4,940            14,830
Other operating expense                                   66,555              45,868            20,687
Total property operating expenses                   $    154,351          $   83,222          $ 71,129



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The increase in property operating expenses attributable to the comparable
properties was due an increase in demand over the prior period. Management and
franchise fee expense for the three months ended March 31, 2022 and 2021
included a reduction in management and franchise fee expense of $1.0 million and
$4.6 million, respectively, related to the recognition of the Wyndham
termination payment. The decrease in the recognition of the Wyndham termination
payment was due to certain of the Wyndham agreements expiring in 2021 coupled
with the remaining agreements being extended and recognized over a longer
period.

Depreciation and Amortization

Depreciation and amortization expense decreased $0.1 million to $46.9 million
for the three months ended March 31, 2022 from $46.9 million for the three
months ended March 31, 2021.

Impairment Losses


During the three months ended March 31, 2021, we recorded impairment losses of
$5.9 million related to two hotel properties that were sold in May 2021. There
was no impairment recorded during the three months ended March 31, 2022.

Property Tax, Insurance and Other


Property tax, insurance and other expense increased $2.4 million to $22.5
million for the three months ended March 31, 2022 from $20.1 million for the
three months ended March 31, 2021.  The increase was attributable to a $3.6
million increase in property tax, insurance and other expense attributable to
the comparable properties, which was partially offset by a $1.2 million decrease
in property tax, insurance and other expense attributable to the non-comparable
properties. The increase in property tax, insurance and other expense
attributable to the comparable properties was primarily attributable to a
benefit of $5.2 million during the three months ended March 31, 2021 related to
the reversal of accrued real estate tax liabilities in excess of the amounts
owed for certain of our California hotels acquired in our merger with FelCor
Lodging Trust that did not recur in 2022. Additionally, the increase was
attributable to an increase in insurance expense premiums and ground lease rent
due to percentage rent obligations and increases based on the consumer price
index. These increases were partially offset by decreases in other real estate
tax assessments.

General and Administrative

General and administrative expense increased $3.3 million to $14.1 million for
the three months ended March 31, 2022 from $10.8 million for the three months
ended March 31, 2021. The increase was primarily attributable to an increase in
compensation expense, including non-cash compensation expense related to
share-based awards granted during 2021.

Other Income, net


Other income increased $6.8 million to $7.3 million for the three months ended
March 31, 2022 from $0.5 million for the three months ended March 31, 2021. The
increase was primarily attributable to the reclassification of unrealized gains
from accumulated other comprehensive income (loss) due to the discontinuation of
certain cash flow hedges.

Interest Expense

Interest expense decreased $3.3 million to $24.6 million for the three months
ended March 31, 2022 from $27.9 million for the three months ended March 31,
2021.  Interest expense decreased due to lower average debt balances and lower
effective interest rates after taking into account the impact of interest rate
swaps in each of the periods. The components of our interest expense for the
three months ended March 31, 2022 and 2021 were as follows (in thousands):

                                                     For the three months ended March
                                                                    31,
                                                         2022                 2021             $ Change
Senior Notes                                        $      9,743          $    5,942          $  3,801
Revolver and Term Loans                                    9,968              17,178            (7,210)
Mortgage loans                                             3,210               3,454              (244)
Amortization of deferred financing costs                   1,684               1,321               363
Non-cash interest expense related to interest rate
hedges                                                       (44)                  -               (44)
Total interest expense                              $     24,561          $   27,895          $ (3,334)


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Gain on Sale of Hotel Properties, net

During the three months ended March 31, 2022, we sold one hotel property for a
sales price of approximately $35.5 million and recorded a net gain on sale of
approximately $1.4 million. During the three months ended March 31, 2021, we
sold one hotel property for a sales price of approximately $4.4 million and
recorded a net gain on sale of approximately $1.1 million.

Non-GAAP Financial Measures


We consider the following non-GAAP financial measures useful to investors as key
supplemental measures of our performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA,
(4) EBITDAre and (5) Adjusted EBITDA. These non-GAAP financial measures should
be considered along with, but not as alternatives to, net income or loss as a
measure of our operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, and
Adjusted EBITDA, as calculated by us, may not be comparable to FFO, Adjusted
FFO, EBITDA, EBITDAre and Adjusted EBITDA as reported by other companies that do
not define such terms exactly as we define such terms.

Funds From Operations


We calculate funds from operations ("FFO") in accordance with standards
established by the National Association of Real Estate Investment Trusts
("NAREIT"), which defines FFO as net income or loss, excluding gains or losses
from sales of real estate, impairment, the cumulative effect of changes in
accounting principles, plus depreciation and amortization, and adjustments for
unconsolidated partnerships and joint ventures. Historical cost accounting for
real estate assets implicitly assumes that the value of real estate assets
diminishes predictably over time. Since real estate values instead have
historically risen or fallen with market conditions, most real estate industry
investors consider FFO to be helpful in evaluating a real estate company's
operations. We believe that the presentation of FFO provides useful information
to investors regarding our operating performance and can facilitate comparisons
of operating performance between periods and between REITs, even though FFO does
not represent an amount that accrues directly to common shareholders. Our
calculation of FFO may not be comparable to measures calculated by other
companies who do not use the NAREIT definition of FFO or do not calculate FFO
per diluted share in accordance with NAREIT guidance. Additionally, FFO may not
be helpful when comparing us to non-REITs. We present FFO attributable to common
shareholders, which includes our OP units, because our OP units may be redeemed
for common shares. We believe it is meaningful for the investor to understand
FFO attributable to all common shares and OP units.

We further adjust FFO for certain additional items that are not in NAREIT's
definition of FFO, such as hotel transaction costs, pre-opening costs, non-cash
income tax expense or benefit, the amortization of share-based compensation,
non-cash expense related to discontinued interest rate hedges, and certain other
expenses that we consider outside the normal course of operations. We believe
that Adjusted FFO provides useful supplemental information to investors
regarding our ongoing operating performance that, when considered with net
income and FFO, is beneficial to an investor's understanding of our operating
performance.

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The following table is a reconciliation of our GAAP net loss to FFO attributable
to common shareholders and unitholders and Adjusted FFO attributable to common
shareholders and unitholders for the three months ended March 31, 2022 and 2021
(in thousands):
                                                                            For the three months
                                                                              ended March 31,
                                                                                       2022                 2021
Net loss                                                                          $   (15,469)         $   (79,117)
Preferred dividends                                                                    (6,279)              (6,279)
Depreciation and amortization                                                          46,865               46,943
Gain on sale of hotel properties, net                                                  (1,417)              (1,083)
Impairment losses                                                                           -                5,946
Noncontrolling interest in consolidated joint ventures                                    118                  736
Adjustments related to consolidated joint ventures (1)                                    (49)                 (75)
Adjustments related to unconsolidated joint ventures (2)                                  295                  294
FFO                                                                                    24,064              (32,635)
Transaction costs                                                                          62                   60

Amortization of share-based compensation                                                5,185                2,752
Non-cash income tax expense                                                              (135)                   -

Derivative gains in accumulated other comprehensive income (loss)
reclassified to earnings (3)                                                           (5,866)                   -
Other expenses (4)                                                                        584                   56
Adjusted FFO                                                                      $    23,894          $   (29,767)



(1)Includes depreciation and amortization expense allocated to the
noncontrolling interest in the consolidated joint ventures.
(2)Includes our ownership interest in the depreciation and amortization expense
of the unconsolidated joint ventures.
(3)Reclassification of interest rate swap gains from accumulated other
comprehensive income (loss) to earnings for discontinued interest rate hedges.
(4)Represents expenses and income outside of the normal course of operations,
including $0.3 million of non-cash interest expense related to discontinued
interest rate hedges during the three months ended March 31, 2022.

EBITDA and EBITDAre


Earnings before interest, taxes, depreciation and amortization ("EBITDA") is
defined as net income or loss excluding: (1) interest expense; (2) income tax
expense; and (3) depreciation and amortization expense. We consider EBITDA
useful to an investor in evaluating and facilitating comparisons of our
operating performance between periods and between REITs by removing the impact
of our capital structure (primarily interest expense) and asset base (primarily
depreciation and amortization expense) from our operating results.  In addition,
EBITDA is used as one measure in determining the value of hotel acquisitions and
disposals.

In addition to EBITDA, we present EBITDAre in accordance with NAREIT guidelines,
which defines EBITDAre as net income or loss excluding interest expense, income
tax expense, depreciation and amortization expense, gains or losses from sales
of real estate, impairment, and adjustments for unconsolidated joint ventures.
We believe that the presentation of EBITDAre provides useful information to
investors regarding our operating performance and can facilitate comparisons of
operating performance between periods and between REITs.

We also present Adjusted EBITDA, which includes additional adjustments for items
such as hotel transaction costs, pre-opening costs, the amortization of
share-based compensation, non-cash expense related to discontinued interest rate
hedges, and certain other expenses that we consider outside the normal course of
operations. We believe that Adjusted EBITDA provides useful supplemental
information to investors regarding our ongoing operating performance that, when
considered with net income, EBITDA, and EBITDAre, is beneficial to an investor's
understanding of our operating performance.

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The following table is a reconciliation of our GAAP net loss to EBITDA, EBITDAre
and Adjusted EBITDA for the three months ended March 31, 2022 and 2021 (in
thousands):

                                                                            For the three months
                                                                              ended March 31,
                                                                                       2022                 2021
Net loss                                                                          $   (15,469)         $   (79,117)
Depreciation and amortization                                                          46,865               46,943
Interest expense, net of interest income                                               24,389               27,511
Income tax expense                                                                        190                  114
Adjustments related to unconsolidated joint ventures (1)                                  407                  410
EBITDA                                                                                 56,382               (4,139)

Gain on sale of hotel properties, net                                                  (1,417)              (1,083)

Impairment losses                                                                           -                5,946
EBITDAre                                                                               54,965                  724
Transaction costs                                                                          62                   60

Amortization of share-based compensation                                                5,185                2,752

Derivative gains in accumulated other comprehensive income (loss)
reclassified to earnings (2)                                                           (5,866)                   -
Other expenses (3)                                                                        248                   56
Adjusted EBITDA                                                                   $    54,594          $     3,592


(1)Includes our ownership interest in the interest, depreciation, and
amortization expense of the unconsolidated joint ventures.
(2)Reclassification of interest rate swap gains from accumulated other
comprehensive income (loss) to earnings for discontinued interest rate hedges.
(3)Represents expenses and income outside of the normal course of operations.

Liquidity and Capital Resources


Our liquidity requirements consist primarily of the funds necessary to pay for
operating expenses and other expenditures directly associated with our hotel
properties, including:

•funds necessary to pay for the costs of acquiring hotel properties;

•redevelopments, conversions, renovations and other capital expenditures that
need to be made periodically to our hotel properties;

•recurring maintenance and capital expenditures necessary to maintain our hotel
properties in accordance with brand standards;

•interest expense and scheduled principal payments on outstanding indebtedness;

•distributions on common and preferred shares; and

•corporate and other general and administrative expenses.

As of March 31, 2022, we had $522.3 million of cash and cash equivalents and
restricted cash reserves.

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Sources and Uses of Cash

Cash flows from Operating Activities


The net cash flow provided by operating activities totaled $10.3 million and the
net cash flow used in operating activities totaled $29.0 million for the three
months ended March 31, 2022 and 2021, respectively. Our cash flows provided by
or used in operating activities generally consist of the net cash generated by
or operating shortfalls from our hotel operations, the cash paid for corporate
expenses and other working capital changes. Refer to the "Results of Operations"
section for further discussion of our operating results for the three months
ended March 31, 2022 and 2021.

Cash flows from Investing Activities


The net cash flow provided by investing activities totaled $9.8 million for the
three months ended March 31, 2022 primarily due to the $34.1 million in proceeds
from the sale of a hotel property. The net cash flow provided by investing
activities was partially offset by $24.3 million in routine capital improvements
and additions to our hotel properties.

The net cash flow used in investing activities totaled $6.1 million for the
three months ended March 31, 2021 primarily due to $9.9 million in routine
capital improvements and additions to our hotel properties. The net cash flow
used in investing activities was partially offset by $4.0 million in proceeds
from the sale of a hotel property.

Cash flows from Financing Activities


The net cash flow used in financing activities totaled $211.7 million for the
three months ended March 31, 2022 primarily due to the $200.0 million repayment
of the outstanding balance on the Revolver, $7.9 million in distributions to
shareholders and unitholders, $2.6 million in distributions to joint venture
partners, and $1.3 million paid to repurchase common shares to satisfy employee
tax withholding requirements.

The net cash flow used in financing activities totaled $218.5 million for the
three months ended March 31, 2021 primarily due to the $200.0 million pay down
on the Revolver, $8.5 million in repayment of term loans, $7.9 million in
distributions to shareholders and unitholders, $1.3 million paid to repurchase
common shares to satisfy employee tax withholding requirements, and $0.9 million
in scheduled mortgage loan principal payments.

Capital Expenditures and Reserve Funds


We maintain each of our hotel properties in good repair and condition and in
conformity with applicable laws and regulations, franchise agreements and
management agreements. The cost of routine improvements and alterations are paid
out of FF&E reserves, which are funded by a portion of each hotel property's
gross revenues. Routine capital expenditures may be administered by the property
management companies. However, we have approval rights over the capital
expenditures as part of the annual budget process for each of our hotel
properties.

From time to time, certain of our hotel properties may undergo renovations as a
result of our decision to upgrade portions of the hotels, such as guestrooms,
public space, meeting space, and/or restaurants, in order to better compete with
other hotels and alternative lodging options in our markets. In addition, upon
acquisition of a hotel property we often are required to complete a property
improvement plan in order to bring the hotel up to the respective franchisor's
standards. If permitted by the terms of the management agreement, funding for a
renovation will first come from the FF&E reserves. To the extent that the FF&E
reserves are not available or sufficient to cover the cost of the renovation, we
will fund all or the remaining portion of the renovation with cash and cash
equivalents on hand, our Revolver and/or other sources of available liquidity.

With respect to some of our hotels that are operated under franchise agreements
with major national hotel brands and for some of our hotels subject to first
mortgage liens, we are obligated to maintain FF&E reserve accounts for future
capital expenditures at these hotels. The amount funded into each of these
reserve accounts is generally determined pursuant to the management agreements,
franchise agreements and/or mortgage loan documents for each of the respective
hotels, and typically ranges between 3.0% and 5.0% of the respective hotel's
total gross revenue. As of March 31, 2022, approximately $30.7 million was held
in FF&E reserve accounts for future capital expenditures.

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