Company: DRH-PA
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001298946-25-000015
Chunk: 146

Company: DiamondRock Hospitality Co
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 146
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 a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee. The base management fee is between 0.5% and 3.5% 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.”Our management agreements generally 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. The following is a summary of management fees (in thousands):Year Ended December 31,202420232022Base management fees$23,357 $22,543 $20,630 Incentive management fees5,781 4,444 4,790 Amortization of deferred income related to key money (1)(400)(400)(392)Amortization of unfavorable contract liabilities(1,589)(1,589)(1,589)Total management fees, net$27,149 $24,998 $23,439 _____________________________(1)Relates to key money received for Chicago Marriott Downtown Magnificent Mile, Westin Washington D.C. City Center and Henderson Beach Resort. Four of our hotels earned incentive management fees for the year ended December 31, 2024. Five of our hotels earned incentive management fees for the year ended December 31, 2023. Eleven of our hotels earned incentive management fees for the year ended December 31, 2022.Franchise AgreementsWe are party to a franchise agreement at 20 of our hotels as of December 31, 2024. The franchise agreements require royalty fees based on a percentage of gross rooms revenue and, for certain hotels, an additional fee based on a percentage of gross food and beverage revenue. In addition, franchise agreements require fees for marketing, reservation or other program fees based on a percentage of the hotel's gross rooms revenue.  Pursuant to these franchise agreements, we pay a royalty fee ranging between 3.5% and 7% of gross room sales, and, under certain agreements, between 2% and 3% of gross food and beverage sales.The following is a summary of franchise fees for the years ended December 31, 2024, 2023 and