Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | CPLG | |
Entity Registrant Name | COREPOINT LODGING INC. | |
Entity Central Index Key | 0001707178 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 57,711,610 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-38168 | |
Entity Tax Identification Number | 821497742 | |
Entity Address, Address Line One | 125 E. John Carpenter Freeway, Suite 1650 | |
Entity Address, City or Town | Irving | |
Entity Address, State or Province | Texas | |
Entity Address, Postal Zip Code | 75062 | |
City Area Code | 972 | |
Local Phone Number | 893-3199 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Real estate | ||
Land | $ 687 | $ 694 |
Buildings and improvements | 2,581 | 2,562 |
Furniture, fixtures, and other equipment | 385 | 387 |
Gross operating real estate | 3,653 | 3,643 |
Less accumulated depreciation | (1,456) | (1,386) |
Net operating real estate | 2,197 | 2,257 |
Construction in progress | 34 | 43 |
Total real estate, net | 2,231 | 2,300 |
Right of use assets | 28 | |
Cash and cash equivalents | 42 | 68 |
Accounts receivable | 34 | 33 |
Other assets | 60 | 54 |
Total Assets | 2,395 | 2,455 |
Liabilities: | ||
Debt, net | 1,002 | 1,014 |
Mandatorily redeemable preferred shares | 15 | 15 |
Accounts payable and accrued expenses | 101 | 99 |
Dividends payable | 11 | 12 |
Other liabilities | 51 | 11 |
Deferred tax liabilities | 6 | 7 |
Total Liabilities | 1,186 | 1,158 |
Commitments and contingencies | ||
Equity: | ||
Common stock, $0.01 par value; 1.0 billion shares authorized; 57.7 million and 59.5 million shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 1 | 1 |
Additional paid-in-capital | 954 | 974 |
Retained earnings | 251 | 319 |
Noncontrolling interest | 3 | 3 |
Total Equity | 1,209 | 1,297 |
Total Liabilities and Equity | $ 2,395 | $ 2,455 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, shares issued | 57,700,000 | 59,500,000 |
Common Stock, shares outstanding | 57,700,000 | 59,500,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
REVENUES: | ||||
Revenues | $ 219 | $ 233 | $ 427 | $ 429 |
OPERATING EXPENSES: | ||||
Property tax, insurance and other | 19 | 17 | 36 | 35 |
Management and royalty fees | 21 | 9 | 42 | 9 |
Corporate general and administrative | 14 | 39 | 22 | 63 |
Depreciation and amortization | 46 | 39 | 90 | 76 |
(Gain) loss on sales of real estate, casualty and other, net | (6) | 3 | (6) | 2 |
Total Operating Expenses | 224 | 235 | 438 | 429 |
Operating Loss | (5) | (2) | (11) | |
OTHER INCOME (EXPENSES): | ||||
Interest expense | (18) | (18) | (36) | (31) |
Other income, net | 5 | 4 | 7 | 4 |
Loss on extinguishment of debt | (10) | (10) | ||
Total Other Expenses, net | (13) | (24) | (29) | (37) |
Loss from Continuing Operations before income taxes | (18) | (26) | (40) | (37) |
Income tax expense | (1) | (2) | (6) | (1) |
Loss from Continuing Operations, net of tax | (19) | (28) | (46) | (38) |
Loss from discontinued operations, net of tax | (20) | (25) | ||
Net loss | $ (19) | $ (48) | $ (46) | $ (63) |
Earnings (loss) per share: | ||||
Basic and diluted from continuing operations | $ (0.32) | $ (0.48) | $ (0.80) | $ (0.65) |
Basic and diluted from discontinued operations | (0.34) | (0.43) | ||
Basic and diluted earnings (loss) per share | $ (0.32) | $ (0.82) | $ (0.80) | $ (1.08) |
Rooms [Member] | ||||
REVENUES: | ||||
Revenues | $ 215 | $ 228 | $ 419 | $ 420 |
OPERATING EXPENSES: | ||||
Cost of good or service | 102 | 98 | 195 | 185 |
Other [Member] | ||||
REVENUES: | ||||
Revenues | 4 | 5 | 8 | 9 |
OPERATING EXPENSES: | ||||
Cost of good or service | $ 28 | $ 30 | $ 59 | $ 59 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (19) | $ (48) | $ (46) | $ (63) |
Cash flow hedge adjustment, net of tax | 3 | 3 | ||
Termination of cash flow hedge | (3) | (3) | ||
Comprehensive net loss | $ (19) | $ (48) | $ (46) | $ (63) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in- Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Noncontrolling Interest [Member] |
Beginning Balance at Dec. 31, 2017 | $ 828 | $ 1 | $ (212) | $ 1,181 | $ (144) | $ (1) | $ 3 |
Beginning Balance, shares at Dec. 31, 2017 | 58,700,000 | ||||||
Cumulative-effect adjustment from the adoption of new revenue accounting standard | (15) | (15) | |||||
Net loss | (15) | (15) | |||||
Equity-based compensation | 4 | 4 | |||||
Cash flow hedge adjustment, net of tax | 3 | 3 | |||||
Ending Balance at Mar. 31, 2018 | 805 | $ 1 | (212) | 1,185 | (174) | 2 | 3 |
Ending Balance, shares at Mar. 31, 2018 | 58,700,000 | ||||||
Beginning Balance at Dec. 31, 2017 | 828 | $ 1 | (212) | 1,181 | (144) | (1) | 3 |
Beginning Balance, shares at Dec. 31, 2017 | 58,700,000 | ||||||
Net loss | (63) | ||||||
Ending Balance at Jun. 30, 2018 | 1,513 | $ 1 | (3) | 973 | 539 | 3 | |
Ending Balance, shares at Jun. 30, 2018 | 59,600,000 | ||||||
Beginning Balance at Mar. 31, 2018 | 805 | $ 1 | (212) | 1,185 | (174) | 2 | 3 |
Beginning Balance, shares at Mar. 31, 2018 | 58,700,000 | ||||||
Net loss | (48) | (48) | |||||
Equity-based compensation | 2 | 2 | |||||
Equity-based compensation, shares | 1,100,000 | ||||||
Purchase of common stock | Prior To Spin Off [Member] | (2) | (2) | |||||
Purchase of common stock | Post To Spin Off [Member] | (3) | (3) | |||||
Purchase of common stock, shares | Prior To Spin Off [Member] | (100,000) | ||||||
Purchase of common stock, shares | Post To Spin Off [Member] | (100,000) | ||||||
Retirement of treasury stock | 214 | (214) | |||||
Cash flow hedge adjustment, net of tax | 1 | 1 | |||||
Gain on termination of cash flow hedge | (3) | $ (3) | |||||
Reorganization and separation from La Quinta Holdings Inc | 761 | 761 | |||||
Ending Balance at Jun. 30, 2018 | 1,513 | $ 1 | $ (3) | 973 | 539 | 3 | |
Ending Balance, shares at Jun. 30, 2018 | 59,600,000 | ||||||
Beginning Balance at Dec. 31, 2018 | $ 1,297 | $ 1 | 974 | 319 | 3 | ||
Beginning Balance, shares at Dec. 31, 2018 | 59,500,000 | 59,500,000 | |||||
Cumulative-effect adjustment from the adoption of new revenue accounting standard | $ 1 | 1 | |||||
Net loss | (27) | (27) | |||||
Dividends on common stock ($0.20 per share) | (12) | (12) | |||||
Equity-based compensation | 2 | 2 | |||||
Equity-based compensation, shares | 400,000 | ||||||
Purchase of common stock | (9) | (9) | |||||
Purchase of common stock, shares | (700,000) | ||||||
Ending Balance at Mar. 31, 2019 | 1,252 | $ 1 | 967 | 281 | 3 | ||
Ending Balance, shares at Mar. 31, 2019 | 59,200,000 | ||||||
Beginning Balance at Dec. 31, 2018 | $ 1,297 | $ 1 | 974 | 319 | 3 | ||
Beginning Balance, shares at Dec. 31, 2018 | 59,500,000 | 59,500,000 | |||||
Net loss | $ (46) | ||||||
Ending Balance at Jun. 30, 2019 | $ 1,209 | $ 1 | 954 | 251 | 3 | ||
Ending Balance, shares at Jun. 30, 2019 | 57,700,000 | 57,700,000 | |||||
Beginning Balance at Mar. 31, 2019 | $ 1,252 | $ 1 | 967 | 281 | 3 | ||
Beginning Balance, shares at Mar. 31, 2019 | 59,200,000 | ||||||
Net loss | (19) | (19) | |||||
Dividends on common stock ($0.20 per share) | (11) | (11) | |||||
Equity-based compensation | 4 | 4 | |||||
Purchase of common stock | (17) | (17) | |||||
Purchase of common stock, shares | (1,500,000) | ||||||
Ending Balance at Jun. 30, 2019 | $ 1,209 | $ 1 | $ 954 | $ 251 | $ 3 | ||
Ending Balance, shares at Jun. 30, 2019 | 57,700,000 | 57,700,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Jun. 30, 2019 | Mar. 31, 2019 | |
Statement Of Stockholders Equity [Abstract] | ||
Dividends on common stock, per share | $ 0.20 | $ 0.20 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (46) | $ (63) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 90 | 79 |
Amortization of deferred costs and other assets | 11 | 5 |
Gain related to real estate casualties | (4) | 2 |
Loss on extinguishment of debt | 17 | |
Gain on sales of real estate, net of retirement of assets | (2) | |
Equity-based compensation expense | 6 | 6 |
Changes in assets and liabilities: | ||
Accounts receivable | (7) | 9 |
Other assets | 4 | (14) |
Accounts payable and accrued expenses | 6 | (18) |
Other liabilities | 3 | (1) |
Net cash provided by operating activities | 61 | 22 |
Cash flows from investing activities: | ||
Capital expenditures, primarily investments in existing real estate | (47) | (94) |
Lender and other escrows | (15) | |
Insurance proceeds related to real estate casualties | 9 | 7 |
Proceeds from sales of real estate | 24 | 4 |
Net cash used in investing activities | (14) | (98) |
Cash flows from financing activities: | ||
Proceeds from debt | 1,060 | |
Repayment of debt | (19) | (1,005) |
Debt issuance costs | (29) | |
Issuance of mandatorily redeemable preferred shares | 15 | |
Payment of property insurance financing | (5) | |
Dividends on common stock | (23) | |
Proceeds on termination of cash flow hedge, net | 2 | |
Purchase of common stock | (26) | (5) |
Reorganization and separation from La Quinta Holdings Inc. | (23) | |
Net cash (used in) provided by financing activities | (73) | 15 |
Decrease in cash and cash equivalents | (26) | (61) |
Cash and cash equivalents at the beginning of the period | 68 | 141 |
Cash and cash equivalents at the end of the period | $ 42 | $ 80 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Organization and Business CorePoint Lodging Inc., a Maryland corporation (“we,” “us,” “our,” “CorePoint,” or the “Company”) is a nationwide lodging real estate company, primarily serving the upper mid-scale and mid-scale segments, with a portfolio of select service hotels located in the United States (“U.S.”). We have operated as an independent, self-administered, publicly traded company since May 30, 2018. The following table sets forth the number of owned and joint venture hotels and approximate number of rooms at such hotels as of June 30, 2019 and December 31, 2018, respectively: June 30, 2019 December 31, 2018 # of hotels # of rooms # of hotels # of rooms Owned (1) 307 39,300 314 40,200 Joint Venture 1 200 1 200 Totals 308 39,500 315 40,400 (1) As of December 31, 2018, owned hotels include one hotel designated as assets held for sale. No hotels were designated as assets held for sale as of June 30, 2019. For U.S. federal income tax purposes, we intend to make an election to be taxed as a real estate investment trust (“REIT”), effective May 31, 2018, with the filing of our U.S. federal income tax return for the year ended December 31, 2018. We believe that we are organized and operate in a REIT-qualified manner and we intend to continue to operate as such. As a REIT, the Company is generally not subject to federal corporate income tax on the portion of its net income that is currently distributed to its stockholders. To maintain our REIT status, we are required to meet several requirements as provided by the Internal Revenue Code of 1986, as amended (the “Code”). These include that the Company cannot operate or manage its hotels. Therefore, the Company leases the hotel properties to CorePoint TRS L.L.C., the Company's wholly-owned taxable REIT subsidiary ("TRS"), which engages third-party eligible independent contractors to manage the hotels. TRS is subject to federal, state and local income taxes. Also, to maintain REIT status, we must distribute annually at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders. We intend to meet our distribution requirements as required by the Code. On May 30, 2018, La Quinta Holdings Inc., a Delaware corporation (“LQH Parent,” and together with its consolidated subsidiaries, “LQH”) completed the separation of its hotel ownership business from its hotel franchise and hotel management business. The separation was made as part of a plan to spin off LQH’s hotel ownership business into a stand-alone, publicly traded company, CorePoint (“Spin-Off”) prior to the merger (“Merger”) of LQH Parent with a wholly-owned subsidiary of Wyndham Worldwide Corporation, a Delaware corporation (“Wyndham Worldwide” and including its subsidiaries and affiliates, “Wyndham”). As part of the Spin-Off and Merger, Wyndham became franchisor and manager of our hotel operations. For additional discussion of the Spin-Off and the financial presentation, see Note 3 “Discontinued Operations.” Unless otherwise noted, all disclosures in the notes accompanying the unaudited condensed consolidated financial statements reflect only continuing operations. Interim Unaudited Financial Information The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our consolidated financial position as of June 30, 2019 and December 31, 2018, and our consolidated results of operations and cash flows for the periods ended June 30, 2019 and 2018. Interim results are not necessarily indicative of full-year performance, as a result of the impact of seasonal and other short-term activities and the dispositions of hotel properties. The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K. Subsequent to May 30, 2018, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company. The historical unaudited condensed consolidated financial statements as of and through May 30, 2018 represent the financial position and results of operations of entities that were under the common control of the accounting predecessor, LQH Parent. The accompanying condensed consolidated financial statements include the accounts of the Company, as well as its wholly-owned subsidiaries and any consolidated variable interest entities (“VIEs”). We recognize noncontrolling interests for the proportionate share of operations for ownership interests not held by our stockholders. All intercompany transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items as: Spin-Off related adjustments; income taxes; impairment of long-lived assets; casualty losses; fair value evaluations; depreciation and amortization; and equity-based compensation measurements. Actual results could differ from those estimates. Reclassifications Certain line items on the condensed consolidated statements of operations for the three and six months ended June 30, 2018 have been reclassified to conform to the current period presentation following the Spin-Off. These reclassifications had no impact on our net income (loss) or financial position and were made in order to conform to presentations consistent with other REIT lodging companies, combine immaterial amounts and reflect the results of discontinued operations. See Note 3 “Discontinued Operations” for additional information. |
Significant Accounting Policies
Significant Accounting Policies and Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recently Issued Accounting Standards | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED ACCOUNTING STANDARDS Investment in Real Estate Property and equipment and other investments in real estate are stated at cost less accumulated depreciation computed using a straight-line method over the following estimated useful life of each asset: Buildings and improvements 5 to 40 years Furniture, fixtures and other equipment 2 to 10 years Leasehold improvements are depreciated over the shorter of the underlying lease term or the useful lives of the related assets. We capitalize expenditures that increase the overall value of an asset or extend an asset’s life, typically associated with hotel refurbishment, renovation, and major repairs. Such costs primarily include third party contract labor, materials, professional design and other direct costs, and during the redevelopment and renovation period interest, real estate taxes and insurance costs. The interest, real estate taxes and insurance capitalization period begins when the activities related to the development have begun and ceases when the project is substantially complete and the assets are held available for use or occupancy. Once such a project is substantially complete and the associated assets are ready for intended use, interest, real estate taxes and insurance costs are no longer capitalized. Normal maintenance and repair costs are expensed as incurred. Impairment of Real Estate Related Assets If events or circumstances indicate that the carrying amount of a property may not be recoverable over our expected holding period, we make an assessment of the property’s recoverability by comparing the carrying amount of the asset to our estimate of the aggregate undiscounted future operating cash flows expected to be generated over the holding period of the asset including its eventual disposition. If the carrying amount exceeds the aggregate undiscounted future operating cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Any such impairment is treated for accounting purposes similar to an asset acquisition at the estimated fair value, which includes the elimination of the asset’s accumulated depreciation and amortization. We did not record any impairment loss for the three or six months ended June 30, 2019 or 2018. Assets Held for Sale For sales of real estate or assets classified as held for sale, we evaluate whether the disposition will have a major effect on our operations and financial results and will therefore qualify as a strategic shift. If the disposition represents a strategic shift, it will be classified as discontinued operations in our financial statements for all periods presented. If the disposition does not represent a strategic shift, it will be presented in continuing operations in our financial statements. The Company classifies assets as held for sale when criteria are met in accordance with GAAP. At that time, we present the assets and obligations associated with the real estate held for sale separately in our condensed consolidated balance sheet, and we cease recording depreciation and amortization expense related to that asset. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. Cash and Cash Equivalents We classify all cash on hand, demand deposits with financial institutions, and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair market value. We classify cash and cash equivalents as restricted cash when contractual agreements or arrangements impose restrictions on our ability to freely access and utilize the cash and cash equivalent amounts. Accounts Receivable Accounts receivable primarily consists of receivables due from hotel guests, credit card companies and insurance settlements and are carried at estimated collectable amounts. We periodically evaluate our receivables for collectability based on historical experience, the length of time receivables are past due and the financial condition of the debtor. Accounts receivable are written off when collection is not probable and collection efforts have generally ceased. We record uncollectible operating lease receipts as a direct offset to room revenues. We record uncollectible other customer revenues to bad debt expense. Our insurance settlement receivables included in accounts receivable are recorded based upon the terms of our insurance policies and our estimates of insurance losses. We recognize business interruption claims as revenue when collected and accordingly our accounts receivable do not include any amounts related to estimated business interruption claim recoveries. As of June 30, 2019 and December 31, 2018, the Company had $9 million and $13 million of insurance settlement receivables, respectively. Debt and Deferred Debt Issuance Costs Deferred debt issuance costs include costs incurred in connection with issuance of debt, including costs associated with the entry into our loan agreements and revolving credit facility, and are presented as a direct reduction from the carrying amount of debt. These debt issuance costs are deferred and amortized to expense on a straight-line basis over the term of the debt, which approximates the effective interest amortization method. This amortization expense is included as a component of interest expense. When debt is paid prior to its scheduled maturity date and the underlying terms are materially modified, the remaining carrying value of deferred debt issuance costs, along with certain other payments to lenders, is included in loss on extinguishment of debt. Lessee Accounting We adopted Accounting Standards Codification (“ASC”) Topic 842, Leases, effective January 1, 2019. See “Newly Adopted Accounting Standards” below. We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for ground leases and our corporate office lease, where the asset is classified within “right of use assets” and the operating lease liability is classified within “other liabilities” in our consolidated balance sheets. We elected the practical expedient to combine our lease and related non-lease components by class of asset and made the election for our ground leases and our corporate office lease. Right of use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right of use assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our variable lease payments consist of payments based on a rate or index established subsequent to the lease commencement date and non-lease services related to the ground lease, primarily real estate taxes. Variable lease payments are excluded from the right of use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date on a fully levered basis in determining the present value of lease payments. Extension options on our leases are included in our minimum lease terms when they are reasonably certain to be exercised. In our evaluation of the lease term, we consider other arrangements, primarily our debt and franchise agreements, which may have economic consequences related to failure to renew certain ground leases. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. At January 1, 2019, we elected the short-term lease recognition exemption and applied it to our short-term corporate office lease because the remaining term had a lease term of less than twelve months. In May 2019, this lease terminated and was replaced by a long-term corporate office lease. We are not a lessee for any other significant leases. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or pay to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In evaluating the fair value of both financial and non-financial assets and liabilities, GAAP establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations in this category are inherently less reliable than quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies and the applicable underlying observable market assumptions. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. These inputs cannot be validated by readily determinable market data and generally involve considerable judgment by management. We use the highest level of observable market data if such data is available without undue cost and effort. Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (“Cash Flow Hedge”), a hedge of the fair value of a recognized asset or liability (“Fair Value Hedge”), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Cash Flow Hedge are recorded in the condensed consolidated statements of comprehensive income (loss) until they are reclassified into earnings when the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Fair Value Hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the condensed consolidated statements of cash flows. Changes in fair value of undesignated hedge instruments are recorded in current period earnings. As of June 30, 2019, our only derivative, an interest rate cap, is an undesignated hedge instrument. Revenue Recognition We adopted ASC Topic 606, Revenue from Contracts with Customers , We also adopted ASC Topic 842, Leases, effective January 1, 2019, using the modified retrospective transition method. There was no material impact to revenues or continuing operations in our financial statements due to the change in either of these accounting policies. The i Our revenues primarily consist of operating lease revenues from room rentals, which are accounted for under GAAP in accordance with lease accounting standards. Room revenue is recognized as earned on a daily basis, net of customer incentive discounts, cash rebates, and refunds. Other lease revenues primarily include lease revenue from restaurants, billboards and cell towers, all of which are operating leases. Such leases are recognized on a straight-line basis over the term of the lease when collections are considered probable and as earned and collected when collections are not considered probable. Uncollectible lease amounts are recorded as a direct offset to revenues. As a lessor, our operating leases do not contain purchase options or require significant assumptions or judgments. Some of our operating leases contain extension options. For those with extension options we assess the likelihood such options will be exercised in determining the lease term. Customer revenues include other hotel guest revenues generated by the incidental support of hotel operations and are recognized under the revenue accounting standard as the service obligation is completed. Purchase of Common Stock Purchases of common stock are recorded on the trade date at cost, including commissions and other costs, through a removal of the stated par value with the excess recorded as additional paid-in-capital. Equity-Based Compensation We have a stock-based incentive award plan for our employees and directors, which primarily includes time-based and performance-based awards. We recognize the cost of services received in an equity-based payment transaction with an employee or director as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. Measurement for these equity awards is the estimated fair value at the grant date of the equity instruments. The equity-based compensation expense is recognized for awards earned or expected to be earned. Accordingly, the compensation expense for all equity awards is recognized straight-line over the vesting period of the last separately identified vesting portion of the award. Forfeitures for time-based and market-based performance awards are recognized as they occur. Performance awards with targets other than market-based are assessed at each balance sheet date with respect to the expected achievement of the target. Equity-based compensation expense is classified in corporate general and administrative expenses. Dividend equivalent cash payments related to unvested employee and director awards are charged to general and administrative expenses. Dividends awarded as additional stock grants are included in equity-based compensation expense. Income Taxes Subsequent to the Spin-Off, we are organized in conformity with, and operate in a manner that will allow us to elect to be taxed as a REIT for U.S. federal income tax purposes. To the extent we qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders. Accordingly, no provision for U.S. federal income tax expense has been included in our accompanying condensed consolidated financial statements for the three and six months ended June 30, 2019 and for the period from the Spin-Off to June 30, 2018 related to our REIT operations; however, our TRS is subject to U.S. federal, state and local income taxes and our REIT may be subject to state and local taxes. The Company was also subject to U.S. federal, state, local and foreign income taxes prior to the Spin-Off. The Company uses the asset and liability method of accounting for income taxes. Under this method, current income tax expense represents the amounts expected to be reported on the Company’s income tax returns, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be applied to taxable income in the years in which those temporary differences are expected to reverse. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was enacted into law. The Tax Act significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing limitations on net operating loss (“NOL”) carryovers, and allowing ordinary dividend income from a REIT to be eligible for a 20% qualified business income deduction. The Tax Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018, and accordingly, we have measured our federal tax expense at 21%. Concentrations of Credit Risk and Business Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents. We utilize financial institutions that we consider to be of high credit quality and consider the risk of default to be minimal. We also monitor the credit-worthiness of our customers and financial institutions before extending credit or making investments. Certain balances in cash and cash equivalents exceed the Federal Deposit Insurance Corporation limit of $250,000; however, we believe credit risk related to these deposits is minimal. Substantially all of our revenues are derived from our lodging operations and our wholly-owned hotels. Lodging operations are particularly sensitive to adverse economic and competitive conditions and trends, which could adversely affect the Company’s business, financial condition and results of operations. We have a concentration of hotels operating in Texas, Florida and California. The number of hotels and percentages of total hotels as of June 30, 2019 and December 31, 2018, and the percentages of our total revenues, excluding revenue from discontinued operations, from these states for the six months ended June 30, 2019 and year ended December 31, 2018 is as follows: June 30, 2019 December 31, 2018 Number of Hotels Percentage of Total Hotels Percentage of Total Revenue Number of Hotels Percentage of Total Hotels Percentage of Total Revenue Texas 68 22 % 21 % 68 22 % 22 % Florida 49 16 % 18 % 49 16 % 14 % California 21 7 % 10 % 21 6 % 11 % Total 138 45 % 49 % 138 44 % 47 % Our geographic concentration did not significantly change from June 30, 2018 to December 31, 2018. Segment Reporting Our hotel investments have similar economic characteristics and our service offerings and delivery of services are provided in a similar manner, using the same types of facilities and similar technologies. Our chief operating decision maker, the Company's Chief Executive Officer, reviews our financial information on an aggregated basis. As a result, we have concluded that we have one . Principal Components of Expenses As more fully explained in Note 16, “Commitments and Contingencies – Hotel Management and Franchise Agreements,” a third-party management company is responsible for the day to day operations of our hotels. For many expenses, the manager directly contracts for the services in the capacity as a principal, and we reimburse our manager in accordance with the agreements. We present the following expense components and only classify the fee portion of expense as management and royalty fees. We classify all amounts owed to our manager and the franchisor in accounts payable and accrued expenses. Rooms —These expenses include hotel expenses of housekeeping, reservation systems (per our franchise agreements), room, breakfast and other room supplies and front desk costs. Other departmental and support— These expenses include labor and other expenses that constitute non-room operating expenses, including parking, telecommunications, non-room supplies, on-site administrative departments, sales and marketing, loyalty program, recurring repairs and maintenance and utility expenses. Property tax, insurance and other— These expenses consist primarily of real and personal property taxes, other local taxes, operating lease ground rent and insurance. (Gain) loss on sales of real estate, casualty and other, net —This net activity primarily includes gains from our sales of real estate, casualty losses incurred resulting from property damage or destruction caused by any sudden, unexpected or unusual event such as a hurricane or significant casualty in excess of related insurance proceeds and other real estate disposition related activity. Newly Issued Accounting Standards In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements for fair value measurements. While some disclosures have been removed or modified, new disclosures have been added. The guidance is effective for us January 1, 2020. We are currently evaluating the impact of this guidance on our financial position, results of operations and related disclosures, but do not expect the implementation of this guidance to have a material impact on our condensed consolidated financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income but excludes operating lease receivables. The guidance is currently expected to primarily apply to our trade and casualty insurance claim receivables and any other future financial assets that have the contractual right to receive cash that we may acquire in the future. Recently Effective January 1, 2019, we adopted ASC Topic 842, Leases, which established new lease accounting standards for lessees and lessors. For lessees, the new standard requires balance sheet recognition of a right of use asset and lease liability for virtually all leases. At adoption, this primarily related to our ground leases. The amount recognized is generally equal to the present value of the lease payments, based on our incremental borrowing rate. In determining our incremental borrowing rate, we considered fully leveraged secured real estate borrowings. For lessors, the new standard requires leases to be classified as operating or sales type. All of our leases are, and are anticipated to be, operating leases. Operating leases under the new standard are generally accounted for consistently with the prior lease accounting standards. We adopted the new standard using the following practical expedients and policy adoptions: • Modified retrospective transition method, where lease balances as of the adoption date are based on the remaining lease payments as previously accounted for. • Periods prior to the period of adoption are not restated, including disclosures. • The lease classification and direct costs for leases in place as of the date of adoption are not reassessed, including land easements. • Lease term at the date of adoption is based on all known facts as of the adoption date. • For leases where we are the lessor, no separation of a lease into a lease and non-lease component, as provided in the practical expedient. Amounts related to sales taxes collected by us and remitted to the taxing authorities are not included in room revenues or expense. Insurance and real estate taxes where the lessee is directly responsible for the payment to the vendor or taxing authority are also not included in revenue or expense. • For leases where we are the lessee, the short-term lease exception for leases with a remaining term of less than one year. As a lessee, our recognition of lease revenue was substantively consistent with previous guidance and, accordingly, the adoption of the lessor portion of the new standard did not have a material effect on our financial statements. As a lessee, the adoption of the new lease standard resulted in the recognition of right of use assets and lease liabilities, primarily related to our ground leases. As of January 1, 2019, right of use assets and lease liabilities of $27 million and an increase of $1 million to retained earnings were recognized. For the three and six months ended June 30, 2019, the new standard did not have a material effect on our statement of operations. See Note 10 “Revenue” and Note 16 “Commitments and Contingencies” for additional information on our lease accounting . Effective January 1, 2019, we adopted ASU 2018-07, Compensation – Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this standard, most of the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. The Company accounts for its share-based payments to members of its board of directors in the same manner as share-based payments to its employees. Other than to members of our board of directors, the Company does not award share-based payments to any nonemployees. The adoption of this standard did not have a material effect on our financial statements. Effective January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers. The revised guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded prior revenue recognition guidance, including industry-specific revenue guidance. The revised guidance replaced most existing revenue and real estate sale recognition guidance in GAAP. The standard specifically excludes lease contracts, which is our primary recurring revenue source; however, our revenue accounting for incidental hotel revenue will follow the revised guidance. We adopted the new standard using the modified retrospective transition method, where financial statement presentations prior to the date of adoption are not adjusted. Transactions that were not closed as of the adoption date were adjusted to reflect the new standard and we recorded a net reduction to opening retained earnings of approximately $15 million, net of tax, which relates primarily to our discontinued operations From time to time, new accounting standards are issued by the FASB or other standards-setting bodies, which we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently adopted or recently issued standards that are not yet effective have not or will not have a material impact on our consolidated financial statements upon adoption. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2019 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 3. DISCONTINUED OPERATIONS As discussed in Note 1 “Organization and Basis of Presentation,” LQH Parent completed the Spin-Off on May 30, 2018. As part of the Spin-Off closing, LQH Parent distributed to its stockholders all the outstanding shares of CorePoint common stock. Each holder of LQH Parent common stock received one share of CorePoint common stock for each share of LQH Parent common stock held by such holder on the record date after giving effect to a reverse stock split, whereby each share of the common stock of LQH Parent (par value $0.01) was reclassified and combined into one half of a share of the common stock of LQH Parent (par value $0.02). Notwithstanding the legal form of the Spin-Off, for accounting and financial reporting purposes, LQH Parent is presented as being spun-off from CorePoint (a “Reverse Spin”). This presentation is in accordance with GAAP and is primarily a result of the relative significance of CorePoint’s business to LQH’s business, as measured in terms of revenues, profits, and assets. Therefore, CorePoint is considered the divesting entity and treated as the “accounting successor,” and LQH Parent is the “accounting spinnee” and “accounting predecessor” for consolidated financial reporting purposes. In accordance with GAAP, the results of operations related to the hotel franchise and hotel management business are reported as discontinued operations for all periods presented. Additionally, our condensed consolidated financial statement presentation was modified to be more consistent with other REIT lodging companies and reflects the results of discontinued operations. Because the separation was a spin-off among stockholders, for financial statement presentation, there is no gain or loss on the separation of the disposed net assets and liabilities. Rather, the carrying amounts of the net assets and liabilities of the Company’s former hotel franchise and hotel management accounts are removed at their historical cost with an offsetting amount to stockholders’ equity. The amount recognized will be adjusted in future reporting periods as the amount recorded is preliminary pending the finalization of various items including the final determination of the tax liabilities associated with the transaction and the settlement of other remaining considerations with Wyndham. As these matters are finalized pursuant to the transaction agreements, the Company will record an adjustment to its assets or liabilities accounts with an offsetting amount to stockholders’ equity. Additionally, as the Spin-Off was a taxable spin, Wyndham reserved $240 million to cover the tax payment for the Spin-Off, fully assuming all federal and state income taxes related to the Spin-Off and the period from January 1, 2018 to the May 30, 2018 Spin-Off date (the “Spin-Off Date”). Any residual amount of the reserve in excess of the tax payment will be remitted to the Company. Any related tax payment in excess of such reserve is the responsibility of Wyndham with the Company responsible for either delivering to Wyndham cash equal to the excess or issuing shares of common stock to Wyndham in lieu of such cash payment. Any such shares issued to Wyndham would be subject to a registration rights agreement. As these tax valuations are completed and the estimates are refined and finalized, the impact of the reorganization and separation from LQH on stockholders’ equity will be adjusted. There was no activity related to discontinued operations for the three and six months ended June 30, 2019. The following table summarizes the results of the hotel franchise and hotel management business which are presented as discontinued operations for the three and six months ended June 30, 2018 (in millions): Three Months Ended Six Months Ended June 30, 2018 FRANCHISE, MANAGEMENT AND OTHER FEE BASED REVENUES $ 25 $ 58 OPERATING EXPENSES Corporate, general, administrative and marketing 36 64 Depreciation and amortization 2 4 Total Operating Expenses 38 68 Operating Loss (13 ) (10 ) OTHER EXPENSES: Interest expense (6 ) (15 ) Loss on extinguishment of debt (7 ) (7 ) Total Other Expenses (13 ) (22 ) Loss Before Income Taxes (26 ) (32 ) Income tax benefit 6 7 Loss from Discontinued Operations, net of tax $ (20 ) $ (25 ) As permitted under GAAP, the Company has elected not to adjust the condensed consolidated statements of cash flows for the six months ended June 30, 2018 to exclude cash flows attributable to discontinued operations. As such, the following table presents selected financial information of LQH Parent included in the condensed consolidated statements of cash flows for the six months ended June 30, 2018 (in millions): Non-cash items included in net income (loss): Depreciation and amortization $ 4 Amortization of deferred costs 1 Loss on extinguishment of debt 7 Equity-based compensation expense 4 Investing activities: Capital expenditures $ 11 |
Investments In Real Estate
Investments In Real Estate | 6 Months Ended |
Jun. 30, 2019 | |
Real Estate Investments [Abstract] | |
Investments In Real Estate | NOTE 4. INVESTMENTS IN REAL ESTATE During the three months ended June 30, 2019, three hotels classified as investments in real estate were sold for gross proceeds of $16 million resulting in a gain on sales of $2 million. During the six months ended June 30, 2019, five hotels classified as investments in real estate were sold for gross proceeds of $21 million resulting in a gain on sales of $2 million. Net proceeds were used to pay down the CMBS Facility (as defined in Note 6 “Debt”). No hotels classified as investments in real estate were sold during the three months ended June 30, 2018. During the six months ended June 30, 2018, one hotel classified as an investment in real estate was sold for gross proceeds of $5 million resulting in a gain on sales of $0.5 million. Depreciation expense related to buildings and improvements, furniture, fixtures and other equipment was $46 million and $39 million for the three months ended June 30, 2019 and 2018, respectively. Depreciation expense related to buildings and improvements, furniture, fixtures and other equipment was $90 million and $76 million for the six months ended June 30, 2019 and 2018, respectively. Construction in progress primarily includes capitalized costs for ongoing projects that have not yet been put into service. We have pledged substantially all of our investments in real estate as collateral for the CMBS Facility. |
Other Assets
Other Assets | 6 Months Ended |
Jun. 30, 2019 | |
Other Assets [Abstract] | |
Other Assets | NOTE 5. OTHER ASSETS The following table presents other assets as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Lender and other escrows $ 27 $ 20 Prepaid expenses 15 6 Intangible assets, net 4 5 Federal and state tax receivables — 4 Assets held for sale — 3 Other assets, primarily hotel supplies 14 16 Total other assets $ 60 $ 54 Assets held for sale as of December 31, 2018 represents one hotel. This hotel was sold in the second quarter of 2019 for gross proceeds of $3 million with substantially no gain. No hotels were designated as assets held for sale as of June 30, 2019. As required by the CMBS Loan Agreement (as defined in Note 6 “Debt”), we entered into an interest rate cap agreement on May 30, 2018 with a notional amount of $1.035 billion and a one-month London Interbank Offering Rate (“LIBOR”) interest rate cap of 3.25% that expires on July 15, 2020 (the “Interest Rate Cap Agreement”). The Interest Rate Cap Agreement is for a period equal to the existing term of the CMBS Facility and has a notional amount equal to or greater than the then outstanding principal balance of the CMBS Facility. The Company did not designate the interest rate cap as a hedge. The net carrying amount of the interest rate cap was less than $0.1 million as of June 30, 2019, and less than $0.2 million as of December 31, 2018. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 6. DEBT The following table presents the carrying amount of our debt as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Interest Rate as of June 30, 2019 (1) Maturity Date CMBS Facility $ 1,016 $ 1,035 One-month LIBOR + 2.75% June 2020 (2) Revolving Facility — — One-month LIBOR + 4.50% May 2020 (3) 1,016 1,035 Less deferred finance costs (14 ) (21 ) Total debt, net $ 1,002 $ 1,014 (1) One-month LIBOR at June 30, 2019 was 2.40%. (2) After maturity in 2020, includes five one-year extension options at the Company’s option, provided there is no event of default existing as of the commencement of the applicable extension period and the CorePoint CMBS Borrower (as defined below) either extends the current interest rate cap or purchases a new interest rate cap covering the extension period at a strike price as set forth in the CMBS Loan Agreement. (3) After maturity in 2020, includes a one-year extension option at the Company’s option, subject to certain conditions, including that the maturity of the CMBS Facility be extended to a date no earlier than the maturity of the Revolving Facility. Term Facility and Extinguishment of Debt In connection with the Spin-Off and Merger, on May 30, 2018, we entered into the CMBS Loan Agreement and used the proceeds to repay and discharge existing loans (“Term Facility”). During the three and six months ended June 30, 2018, we recorded a $10 million loss related to the extinguishment of the Term Facility. The loss primarily included the write-off of unamortized debt issuance costs and original issuance discount. The interest rate for the Term Facility from January 1, 2018 to March 6, 2018 was LIBOR plus 2.75% and for the period from March 7, 2018 to May 30, 2018 was LIBOR plus 3.00%. CMBS Facility On May 30, 2018, certain indirect wholly-owned subsidiaries of CorePoint (collectively, the “CorePoint CMBS Borrower”), TRS and CorePoint Operating Partnership L.P. (“CorePoint OP”) entered into a loan agreement (the “CMBS Loan Agreement”), pursuant to which the CorePoint CMBS Borrower borrowed an aggregate principal amount of $1.035 billion under a secured mortgage loan secured primarily by mortgages for substantially all of our wholly-owned and ground leased hotels, an excess cash flow pledge for seven owned and ground leased hotels and other collateral customary for mortgage loans of this type (the “CMBS Facility”). The proceeds from the CMBS Facility were used to facilitate the repayment of part of LQH Parent’s existing debt. In addition, simultaneously with the closing of the Merger, Wyndham repaid, or caused to be repaid, the Term Facility. The CMBS Facility bears interest at a rate equal to the sum of (i) one-month LIBOR and (ii) 2.75% per annum for the first five years of the term, 2.90% for the sixth year of the term and 3.00% for the seventh year of the term. Interest is generally payable monthly. In addition, in connection with the Spin-Off, we incurred additional interest expense of $2 million related to the securitization of the debt. The CMBS Facility has an initial term of two years, maturing June 9, 2020, with five one-year extension options, exercisable at the CorePoint CMBS Borrower’s election, provided there is no event of default existing as of the commencement of the applicable extension period and the CorePoint CMBS Borrower either extends the current interest rate cap or purchases a new interest rate cap covering the extension period at a strike price as set forth in the CMBS Loan Agreement. No regular principal payments are due prior to the scheduled or extended maturity date. The CMBS Facility is pre-payable in whole or in part subject to payment of (i) all accrued interest through the end of the applicable accrual period and (ii) prior to the payment date in December 2019 a spread maintenance premium and in certain cases third party LIBOR breakage costs. Notwithstanding the above, the CorePoint CMBS Borrower is permitted to prepay the CMBS Facility by an amount not to exceed 20% of the original principal balance of the CMBS Facility, in the aggregate without payment of any spread maintenance premium and the spread maintenance premium for prepayments after the payment date in November 2019 will be zero. The Company may obtain the release of individual properties from the CMBS Facility, provided that certain conditions of the CMBS Loan Agreement are satisfied. The most restrictive of these conditions provide that after giving effect to such release, the debt yield for the CMBS Facility (generally defined as hotel property operating net income before interest, depreciation and less a fixed amount of corporate general and administrative expenses divided by the outstanding principal balance of the CMBS Facility, “Debt Yield”) is not less than the greater of (x) 16.44% and (y) the lesser of (i) the Debt Yield in effect immediately prior to such release and (ii) 16.94% (such result the “Release Debt Yield”). However, if such release is in connection with the sale of a property to an unrelated third party, such sold property may be released if the CMBS Borrower prepays an amount equal to the greater of (x) the allocated portion of the outstanding CMBS Facility plus a premium ranging from 5% to 10%, as defined in the CMBS Loan Agreement, and (y) the lesser of (i) the full net proceeds from the sale of the property received by the Company and (ii) the amount necessary to satisfy the Release Debt Yield. Accordingly, such CMBS Loan Agreement release provisions could affect the Company’s ability to sell properties or restrict the use of sale proceeds only to the prepayment of the CMBS Facility. During the six months ended June 30, 2019, in connection with the sale of five secured hotel properties, $19 million of the net proceeds were used to pay down the principal of the CMBS Facility. During the three and six months ended June 30, 2019, we recorded a loss of less than a $0.1 million related to these principal pay downs. The CMBS Facility includes customary non-recourse carve-out guarantees, affirmative and negative covenants and events of default, including, among other things, guarantees for certain losses arising out of customary “bad-boy” acts of CorePoint OP and its affiliates and environmental matters (which will be recourse for environmental matters only to the CorePoint CMBS Borrower provided that the required environmental insurance is delivered to the lender), a full recourse guaranty with respect to certain bankruptcy events, restrictions on the ability of the CorePoint CMBS Borrower to incur additional debt and transfer, pledge or assign certain equity interests or its assets, and covenants requiring the CorePoint CMBS Borrower to exist as “special purpose entities,” maintain certain ongoing reserve funds and comply with other customary obligations for commercial mortgage-backed securities loan financings. As of June 30, 2019, the Company believes it was in compliance with these covenants. At the closing of the CMBS Facility, the CorePoint CMBS Borrower deposited in the loan servicer’s account approximately $15 million in upfront reserves for property improvement and environmental remediation, which funds may be periodically disbursed to the CorePoint CMBS Borrower throughout the term of the loan to cover such costs. In addition, the CMBS Facility lender has the right to control the disbursement of hotel operating cash receipts during the continuation of an event of default under the loan or if and while the Debt Yield for the CMBS Facility falls below 12.33% through May 30, 2023 and 12.83% thereafter, in each case, for two consecutive quarters. As of June 30, 2019, the Company believes it was in compliance with these covenants. Revolving Facility Also on May 30, 2018, CorePoint Borrower L.L.C. ( Interest under the Revolving Facility will be, at the option of the CorePoint Revolver Borrower, either at a base rate plus a margin of 3.5% or a LIBOR rate plus a margin of 4.5%. With respect to base rate loans, interest will be payable at the end of each quarter. With respect to LIBOR loans, interest will be payable at the end of the selected interest period but no less frequently than quarterly. Additionally, there is a commitment fee payable at the end of each quarter equal to 0.5% of unused commitments under the Revolving Facility and customary letter of credit fees. The Revolving Facility contains customary representations and warranties, affirmative and negative covenants and defaults. The most restrictive of these are a maximum total net leverage ratio financial covenant and minimum interest coverage ratio financial covenant, in each case, as defined, and tested as of the last day of any fiscal quarter in which borrowings under the Revolving Facility and outstanding letters of credit exceed 10% of the aggregate commitments of the Revolving Facility. As of June 30, 2019, the Company believes it was in compliance with these covenants. The obligations under the Revolving Facility are unconditionally and irrevocably guaranteed by CorePoint OP, and, subject to certain exceptions, each of the CorePoint Revolver Borrower and its existing and future domestic subsidiaries that own equity interests in any CorePoint CMBS Borrower. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses and Other Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Accrued Expenses and Other Liabilities | NOTE 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES AND OTHER LIABILITIES Accounts payable, accrued expenses and other liabilities include the following as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Due to hotel manager $ 49 $ 44 Real estate taxes 20 23 Sales and occupancy taxes 11 8 Interest 3 3 Other accounts payable and accrued expenses 18 21 Total accounts payable and accrued expenses $ 101 $ 99 Operating lease liabilities (1) $ 28 $ — Property insurance financing 9 — Below market leases, net 6 6 Other liabilities 8 5 Total other liabilities $ 51 $ 11 (1) As of June 30, 2019, the incremental borrowing rate and the remaining maturity for our ground leases and corporate office lease was a weighted average of 8.6% and 29 years. |
Mandatorily Redeemable Preferre
Mandatorily Redeemable Preferred Shares | 6 Months Ended |
Jun. 30, 2019 | |
Preferred Stock [Abstract] | |
Mandatorily Redeemable Preferred Shares | NOTE 8. MANDATORILY REDEEMABLE PREFERRED SHARES In connection with LQH’s internal reorganization prior to the Spin-Off, the Company issued 15,000 shares of Cumulative Redeemable Series A Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), to a wholly-owned subsidiary of LQH Parent for cash of $15 million. LQH, through its subsidiary, privately sold all of the Series A Preferred Stock to an unrelated third-party investor immediately prior to the completion of the Spin-Off. The Series A Preferred Stock has an aggregate liquidation preference of $15 million, plus any accrued and unpaid dividends thereon. As of June 30, 2019, we pay a cash dividend on the Series A Preferred Stock equal to 13% per annum, payable quarterly. If our leverage ratio, as defined, exceeds 7.5 to 1.0 as of the last day of any fiscal quarter, or if an event of default occurs (or has occurred and has not been cured) with respect to the Series A Preferred Stock, we will be required to pay a cash dividend on the Series A Preferred Stock equal to 15% per annum. Our dividend rate on the Series A Preferred Stock will increase to 16.5% per annum if, at any time, we are both in breach of the leverage ratio covenant and an event of default occurs (or has occurred and has not been cured) with respect to the Series A Preferred Stock. As of June 30, 2019, none of these ratios have been exceeded and we have not triggered any of the events that would result in an increased dividend rate. The Series A Preferred Stock is senior to our common stock with respect to dividends and with respect to dissolution, liquidation or winding up of the Company. The Series A Preferred Stock is mandatorily redeemable by us in 2028, upon the tenth anniversary of the date of issuance. Beginning in 2025, upon the seventh anniversary of the issuance of the Series A Preferred Stock, we may redeem the outstanding Series A Preferred Stock for an amount equal to its aggregate liquidation preference, plus any accrued but unpaid dividends. The holders of the Series A Preferred Stock may also require us to redeem the Series A Preferred Stock upon a change of control of the Company for an amount equal to its aggregate liquidation preference plus any accrued and unpaid dividends thereon (and a premium if the change of control occurs prior to the seventh anniversary of the issuance of the Series A Preferred Stock). Due to the fact that the Series A is mandatorily redeemable, the preferred shares are classified as a liability on the accompanying condensed consolidated balance sheet, and dividends on these preferred shares are classified as interest expense in the accompanying condensed consolidated statements of operations. Holders of Series A Preferred Stock generally have no voting rights. However, without the prior consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, we are prohibited from (i) authorizing or issuing any additional shares of Series A Preferred Stock, or (ii) amending our charter or entering into, amending or altering any other agreement in any manner that would adversely affect the Series A Preferred Stock. Holders of shares of the Series A Preferred Stock have certain preemptive rights over issuances by us of any class or series of our stock ranking on parity with the Series A Preferred Stock. If we are either (a) in arrears on the payment of dividends that were due on the Series A Preferred Stock on six or more quarterly dividend payment dates, whether or not such dates are consecutive, or (b) in default of our obligations to redeem the Series A Preferred Stock or following a change of control, the preferred stockholders may designate a representative to attend meetings of our board of directors as a non-voting observer until all unpaid Series A Preferred Stock dividends have either been paid or declared with an amount sufficient for payment set aside for payment, or the shares required to be redeemed have been redeemed, as applicable. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 9. STOCKHOLDERS’ EQUITY On March 21, 2019, our Board of Directors authorized a $50 million share repurchase program. Under the share repurchase program, the Company may purchase common stock in the open market, in privately negotiated transactions or in such other manner as determined by it, including through repurchase plans complying with the rules and regulations of the Securities and Exchange Commission (“SEC”). The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of common stock and the program may be suspended or discontinued at any time. Through June 30, 2019, the Company acquired 2.1 million shares at a weighted average cost per share of $11.70 under the share repurchase program. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenues [Abstract] | |
Revenue | NOTE 10. REVENUE Revenue for the three and six months ended June 30, 2019 is comprised of the following components (in millions): Three Months Ended Six Months Ended June 30, 2019 Operating lease revenues: Rooms $ 215 $ 419 Other 2 3 Total lease revenues 217 422 Customer revenues 2 5 Total revenues $ 219 $ 427 Operating lease revenues other primarily include lease arrangements for restaurants, billboards and cell towers. Customer revenues, which are classified within other revenues, generally relate to amounts generated by the incidental support of the hotel operations, including service fees, parking and food. For each of the three and six months ended June 30, 2019, variable lease revenue was $0.1 million. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11. INCOME TAXES Subsequent to the Spin-Off, the Company intends to elect to be taxed as a REIT with the filing of its U.S. federal income tax return for the year ended December 31, 2018. To the extent we qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders; however, our TRS is subject to U.S. federal, state and local income taxes and our REIT may be subject to state and local taxes. Tax benefit related to discontinued operations in the amount of $7 million is recorded in “loss from discontinued operations, net of tax” in our statement of operations for the period ended June 30, 2018. From January 1, 2018 to the Spin-Off Date, all of the taxable income from operations (both continuing and discontinued operations) and the tax gain from the Spin-Off will be included in the U.S. federal and state income tax returns of LQH and Wyndham will be responsible for their payment. However, in accordance with GAAP, the tax expense for the six months ended June 30, 2018 associated with our continuing operations is included in our current tax expense. The following table presents the Company’s income tax expense for the three and six months ended June 30, 2019 and 2018 (in millions): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Current tax expense $ (2 ) $ — $ (7 ) $ (1 ) Deferred tax benefit (expense) 1 (2 ) 1 — Total income tax expense $ (1 ) $ (2 ) $ (6 ) $ (1 ) The expense for the six month period ended June 30, 2019 differs from the statutory federal tax rate of 21%, primarily due to the impact of the REIT election and state income taxes. The expense for the six month period ended June 30, 2018 differs from the statutory federal tax rate of 21% primarily due to the impact of certain restructuring costs and state income taxes. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-Based Compensation | NOTE 12. EQUITY-BASED COMPENSATION Our 2018 Omnibus Incentive Plan (the “Plan”), as amended, authorizes the grant of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), Performance Stock Units (“PSUs”), non-qualified and incentive stock options, dividend equivalents, and other stock-based awards. A total of eight million shares of common stock has been authorized for issuance under the Plan and approximately six million shares of common stock are available for issuance as of June 30, 2019. As of June 30, 2019, the Company has RSAs, RSUs and PSUs outstanding. The RSAs and RSUs are time-based, where the awards vest over time, generally three to four years, and are not subject to future performance targets. RSAs and RSUs are initially recorded at the Company’s common stock market price at the time of the grant. The PSUs are subject to performance-based vesting, where the ultimate award is based on the achievement of established performance targets, generally over two to three years. As of June 30, 2019, these performance targets relate to relative and absolute total shareholder returns, as defined, which are treated as market-based conditions. Accordingly, these market-based PSUs are recorded at the fair value of the award using a Monte Carlo simulation valuation model. The currently outstanding PSUs vest over two to three years. RSAs, RSUs and PSUs are subject to accelerated vesting in the event of certain defined events. In connection with the Spin-Off, the Company entered into an agreement with LQH Parent to modify all outstanding awards granted to the employees of LQH Parent. The agreement generally provided that, as of the separation, holders of such awards were entitled to receive CorePoint equity-based, time-vesting, compensation awards. Generally, all such CorePoint equity-based compensation awards retain the same terms and vesting conditions as the original LQH Parent equity-based compensation awards to which such awards relate (except for the LQH Parent PSUs, as described below). Under the agreement, holders of LQH Parent RSAs and LQH Parent RSUs received RSAs and RSUs. Holders of LQH Parent PSUs received RSAs. P Following the Spin-Off, For the three months ended June 30, 2019, and 2018, we recognized $4 million and $1 million, respectively we recognized $6 million and $2 million, respectively For the three and six months ended June 30, 2018, we recognized $1 million and $4 million of equity-based compensation expense in discontinued operations, respectively. No equity-based compensation expense was recognized in discontinued operations for the three and six months ended June 30, 2019. The following table summarizes the activity of our RSAs, RSUs and PSUs during the six months ended June 30, 2019 (because of the Spin-Off and the stock compensation restructuring described above, activity prior to 2019 is not presented) RSAs PSUs RSUs Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Outstanding at January 1, 2019 884,068 $ 20.50 — $ — 14,624 $ 5.77 Granted 428,865 11.04 447,527 6.99 478 12.49 Vested (245,601 ) 15.37 — — (9,611 ) 6.04 Forfeited (51,540 ) 15.61 (73,694 ) 6.99 — — Outstanding at June 30, 2019 1,015,792 $ 17.99 373,833 $ 6.99 5,491 $ 5.89 RSAs are included in amounts for issued and outstanding common stock but are excluded in the computation of basic earnings (loss) per share. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | NOTE 13. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of the Company’s common stock outstanding plus other potentially dilutive securities, except when the effect would be anti-dilutive. Dilutive securities include equity-based awards as discussed in Note 12 “Equity-Based Compensation.” As described in Note 3 “Discontinued Operations,” on May 30, 2018, LQH Parent stockholders of record as of May 18, 2018, received one share of CorePoint common stock for each share of LQH Parent common stock held after giving effect to the reverse stock split. Basic and diluted net earnings (loss) per share for the three and six months ended June 30, 2018 is calculated using the weighted average number of basic, dilutive and anti-dilutive shares of common stock outstanding during the periods, as adjusted for the one-to-two distribution ratio. The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2019 and 2018 (in millions, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Numerator: Loss from Continuing Operations, net of tax $ (19 ) $ (28 ) $ (46 ) $ (38 ) Loss from Discontinued Operations, net of tax — (20 ) — (25 ) Net loss $ (19 ) $ (48 ) $ (46 ) $ (63 ) Denominator: Weighted average number of shares outstanding, basic 57.0 58.3 57.8 58.2 Weighted average number of shares outstanding, diluted 57.0 58.3 57.8 58.2 Basic and diluted loss per share from continuing operations $ (0.32 ) $ (0.48 ) $ (0.80 ) $ (0.65 ) Basic and diluted loss per share from discontinued operations — (0.34 ) — (0.43 ) Basic and diluted loss per share $ (0.32 ) $ (0.82 ) $ (0.80 ) $ (1.08 ) The earnings per share amounts are calculated using unrounded amounts and shares which result in differences in rounding of the presented per share amounts. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 14. FAIR VALUE MEASUREMENTS As of June 30, 2019 and December 31, 2018, our only fair value measurement on a recurring basis relates to our interest rate cap, which is classified within other assets. As of June 30, 2019 and December 31, 2018, the fair value was approximately less than $0.1 million and $0.2 million, respectively, determined as Level 2 under the fair value hierarchy. For the three and six months ended June 30, 2019, we recorded interest expense of less than $0.1 million and less than $0.2 million related to the change in fair value of the interest rate cap, respectively. During 2018, our fair value measurement on a recurring basis related to our interest rate swap. As part of the Spin-Off, the fair value of the interest rate swap was terminated. For the three months ended June 30, 2018, we recorded a $3 million gain on termination of cash flow hedge in our condensed consolidated statement of comprehensive income. As of June 30, 2019 and 2018, there were no assets or liabilities recorded at fair value on a nonrecurring basis. For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value Debt - CMBS Facility ( 1)(2) $ 1,016 $ 1,016 $ 1,035 $ 1,035 Mandatorily redeemable preferred shares ( 1) 15 15 15 15 (1) Classified as Level 3 under the fair value hierarchy. (2) Carrying amount excludes deferred finance costs of $14 million as of June 30, 2019 and $21 million as of December 31, 2018. We estimate the fair value of our debt and mandatorily redeemable preferred stock by using discounted cash flow analysis based on current market inputs for similar types of arrangements, including prepayment terms. As our debt instruments predominantly have interest rates set by floating rates and due to the recent issuance of the instruments, we have estimated that the contractual interest rates approximate their market rate. Fluctuations in these assumptions will result in different estimates of fair value. We believe the carrying amounts of our cash and cash equivalents, accounts receivable and lender and other escrows approximate fair value as of June 30, 2019 and December 31, 2018, as applicable. Our estimates of the fair values were determined using available market information and valuation methods appropriate in the circumstances. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 15. RELATED PARTY TRANSACTIONS LQH Parent In connection with the Spin-Off and Merger, CorePoint entered into several agreements with LQH Parent prior to consummation of the Spin-Off, which Spin-Off Spin-Off Spin-Off Other Related Parties Prior to April 14, 2014, LQH and predecessor entities were owned and controlled by The Blackstone Group Inc. (formerly known as The Blackstone Group L.P.) and its affiliates (collectively, “Blackstone”). Subsequent to April 14, 2014, Blackstone has owned a noncontrolling ownership interest. As of June 30, 2019, Blackstone beneficially owned approximately 30% of our common stock outstanding. In connection with the Spin-Off and prior to securitization of the CMBS Facility, approximately $518 million of the aggregate principal amount of our debt was held by Blackstone. During the third quarter of 2018, Blackstone contributed the $518 million loan to a single asset securitization vehicle and invested in a $99 million subordinate risk retention interest issued by such securitization vehicle. Total interest payments made to Blackstone in regard to the $99 million subordinate risk retention interest for the three and six months ended June 30, 2019 were approximately $2 million and $3 million, respectively. We also purchase products and services from entities affiliated with or owned by Blackstone in the ordinary course of operating our business. The amounts paid for these products and services were approximately zero and $1 million during the six months ended June 30, 2019 and 2018, respectively. There were no amounts paid for these products and services during the three months ended June 30, 2019 and 2018, respectively. Subsequent to the Spin-Off, these products and services are contracted independently by our hotel manager and are not included in the amounts above. In September 2018, the Company entered into a consulting agreement with Mr. Glenn Alba, a member of the Company’s board of directors, pursuant to which Mr. Alba provides consulting services in connection with developing, reviewing and advising on the Company’s real estate and capital deployment policies, strategies and programs. Mr. Alba receives approximately $8 thousand monthly and reimbursement of all reasonable business expenses incurred on behalf of the Company. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 16. COMMITMENTS AND CONTINGENCIES Hotel Management and Franchise Agreements Management Fees On May 30, 2018, the Company entered into separate hotel management agreements with LQ Management L.L.C. (“LQM”), whereby we pay a fee equal to 5% of total gross revenues, as defined . The term of the management agreements is 20 years, subject to two renewals of five years each, at LQM’s option. There are penalties for early termination. LQM generally has sole responsibility for all activities necessary for the operation of the hotels, including establishing room rates, processing reservations and promoting and publicizing the hotels. LQM also provides all employees for the hotels, prepares reports, budgets and projections, and provides other administrative and accounting support services to the hotels. We have consultative and limited approval rights with respect to certain actions of LQM, including entering into long-term or high value contracts, engaging in certain actions relating to legal proceedings, approving the operating budget, making certain capital expenditures and the hiring of certain management personnel. We are also responsible for reimbursing LQM for certain costs incurred by LQM during the fulfillment of their duties, such as payroll costs for certain employees, general liability insurance and other costs that the manager incurs to operate the hotels. For the three and six months ended June 30, 2019, our management fee expense was $10 million and $21 million, respectively. For both the three month and the six month periods ended June 30, 2018, our management fee expense was $4 million. On July 30, 2019, we gave notice to LQM of several events of default under the management agreements relating to all of our wholly-owned properties. LQM has denied that it is in default under the management agreements. We are currently unable to estimate the effect any potential resulting termination of the management agreements may have on our financial statements. Royalty Fees On May 30, 2018, we entered into separate hotel franchise agreements with La Quinta Franchising LLC (“LQ Franchising”). Pursuant to the franchise agreements, we were granted a limited, non-exclusive license to use our franchisor’s brand names, marks and system in the operation of our hotels. The franchisor also may provide us with a variety of services and benefits, including centralized reservation systems, participation in customer loyalty programs, national advertising, marketing programs and publicity designed to increase brand awareness, as well as training of personnel. In return, we are required to operate franchised hotels consistent with the applicable brand standards. Our franchise agreements require that we pay a 5% royalty fee on gross room revenue. The term of the franchise agreements is through 2038, subject to one renewal of ten years, at the franchisor’s option. There are penalties for early termination. For the three and six months ended June 30, 2019, our royalty fee expense was $11 million and $21 million, respectively. For both the three month and the six month periods ended June 30, 2018, our royalty fee expense was $5 million. In addition to the royalty fee, the franchising agreements include a reservation fee of 2% of gross room revenues, a marketing fee of 2.5% of gross room revenues, a loyalty program fee of 5% of eligible room night revenues, and other miscellaneous ancillary fees. Reservation fees are included within room expense in the accompanying condensed consolidated statements of operations. The marketing fee and loyalty program fees are included within other departmental and support in the accompanying condensed consolidated statements of operations. Our requirement to meet certain brand standards imposed by our franchisor includes requirements that we incur certain capital expenditures, generally ranging from $1,500 to $7,500 per hotel room (with various specific amounts within this range being applicable to different groups of our hotels) during a prescribed period generally ranging from two to eleven years. These amounts are over and above the capital expenditures we are required to make each year for recurring furniture, fixtures and equipment maintenance. However, these amounts that we are required to spend are subject to reduction, in varying degrees, by the amount of capital expenditures made for hotels in the applicable group over and above the capital expenditures required for the recurring maintenance in one or more years before receipt of the franchisor’s notice. The initial period during which the franchisor can notify us that we must make these capital expenditures is through 2028. At the franchisor’s discretion, subject to the franchise agreement provisions governing when such requirements may be imposed, the franchisor may provide a notice obligating us to meet those capital expenditure requirements generally within two to nine years of the notice. As of June 30, 2019, no such notices have been received; however, approximately 65% of our hotels are potentially eligible for such capital expenditure requirements. Through 2028, our remaining hotels will become eligible for such notices and capital expenditure requirements. We expect to meet these requirements primarily through our recurring capital expenditure program. As of June 30, 2019, $15 million was held in lender escrows that can be used to finance these requirements. Litigation We are a party to a number of pending claims and lawsuits arising in the normal course of business. We do not consider our ultimate liability with respect to any such claims or lawsuits, or the aggregate of such claims and lawsuits, to be material in relation to our condensed consolidated financial condition, results of operations or our cash flows taken as a whole. We maintain general and other liability insurance; however, certain costs of defending lawsuits, such as those within the retention or insurance deductible amount, are not covered by or are only partially covered by insurance policies. We regularly evaluate our ultimate liability costs with respect to such claims and lawsuits. We accrue costs from litigation as they become probable and estimable. Tax Contingencies Under the terms of the Spin-Off and Merger agreements, we retained any liabilities arising from LQH federal, state or local income tax obligations through tax years ended December 31, 2014. Wyndham assumed LQH federal, state or local income tax obligations for LQH tax periods thereafter through and including the Spin-Off Date. Additionally, as the Spin-Off was a taxable spin, Wyndham reserved $240 million to cover their potential tax payments related to the Spin-Off. Any amount of the reserve related to the spin tax payment will be remitted to the Company with an increase to stockholders’ equity. Any related tax payment in excess of the reserve is the responsibility of Wyndham with the Company delivering to Wyndham either cash equal to the excess or issuing common stock based on the excess payment amount and the current fair value of the Company’s common stock. As the income tax returns for the year ended 2017 were recently filed and the short period return to the Spin-Off Date has not yet been filed, which along with other supporting in-process schedules would serve as the basis for determining the final tax payment related to the Spin-Off, the final determination of the reserve amount is not known. However, we believe the eventual resolution of the reserve amount will not be material to the Company’s consolidated financial condition. Any adjustment related to the settlement of the reserve, including the issuance of the Company’s common stock, would result in an adjustment to stockholders’ equity. We are subject to regular audits by federal and state tax authorities related to prior periods, which may result in additional tax liabilities. The Internal Revenue Service (“IRS”) is currently auditing one of our former LQH REITs and one of our former LQH TRSs, in each case for the tax years ended December 31, 2010 and 2011. As noted above, any obligations related to these tax years are the responsibility of the Company, with no reimbursement or offset from Wyndham or any other parties. On July 7, 2014, we received an IRS 30-Day Letter proposing to impose a 100% tax on the REIT totaling $158 million for the periods under audit in which the IRS has asserted that the internal rent charged for these periods under the lease of hotel properties from the REIT to our consolidated taxable REIT subsidiary exceeded an arm’s length rent. An appeal of this proposed imposition of tax was filed with IRS Appeals in August 2014. In November 2017, IRS Appeals returned the matter to IRS Examination for further factual development. In 2014, the IRS also began an audit of the tax returns of the same entities subject to the 2010 and 2011 audit in each case for the tax years ended December 31, 2012 and 2013. As noted above, any obligations related to these tax years are the responsibility of the Company, with no reimbursement or offset from Wyndham or any other parties. On August 8, 2017, the IRS issued a 30-Day Letter, in which it proposed to disallow net operating loss carryovers originating in tax years 2006-2011 or, in the alternative, tax years 2006-2009, depending upon the outcome of the 2010-2011 examination discussed above. In April 2019, the IRS notified the Company that it was combining all of the audits, restating their position with respect to the arm’s length nature of the rents and the disallowance of the NOLs and requesting our acknowledgement of certain facts related to the audits. On May 10, 2019, we furnished our requested changes to Acknowledgements of Facts with respect to tax years 2010 through 2013 restating our disagreement with certain of the IRS’s statements. On June 11, 2019, we received a notice of proposed adjustments (“NOPA,” also known as the 30-day letter). Subsequently, we have furnished a written response to the IRS. It is expected that the IRS will issue a 30-day letter and report, at which time, we will have 30 days to protest. We expect the IRS will then either issue a rebuttal or forward the matter to IRS Appeals. Although the timing is uncertain, we expect that IRS Appeals will again be involved by the end of 2019. We believe the IRS transfer pricing methodologies applied in the audits contain flaws and that the IRS proposed tax and adjustments are inconsistent with the U.S. federal tax laws related to REITs. Based on our analysis of the NOL notice, we believe the IRS NOL disallowances applied in the 2012-2013 audit contain the same flaws present in the 2010-2011 audit and that the IRS proposed NOL adjustments are inconsistent with the U.S. federal tax laws related to REITs. We have concluded that the positions reported on our tax returns under audit by the IRS are, based on their technical merits, more-likely-than-not to be sustained upon conclusion of the examination. Accordingly, as of June 30, 2019, we have not established any reserves related to this proposed adjustment or any other issues reflected on the returns under examination. If, however, we are unsuccessful in challenging the IRS, an excise tax would be imposed on the REIT equal to 100% of the excess rent and we would be responsible for additional income taxes, interest and penalties, which could adversely affect our financial condition, results of operations and cash flow and the trading price of our common stock. Such adjustments could also give rise to additional state income taxes. Purchase Commitments As of June 30, 2019, we had approximately $35 million of purchase commitments related to certain continuing redevelopment and renovation projects and other hotel service contracts in the ordinary course of business. Lease Commitments As a lessee, our arrangements are primarily ground leases for certain of our hotels. These ground leases generally include base rents, which may be reset based on inflation indexes or pre-established increases, contingent rents based upon the respective hotel’s revenues, and reimbursement or primary responsibility for related real estate taxes and insurance expenses. The initial base terms for the leases are generally in excess of 25 years. Many of these arrangements also contain renewal options at the conclusion of the initial lease term, generally at fair value or pre-set amounts. Including the renewal options, these leases extend for varying periods through 2096. We consider the reset base rents at the time of such renewals as the future minimum rental payment. Our other lease arrangement primarily relates to the lease of our corporate office, which requires payments of escalating base rents and other variable reimbursements. The contractual maturity analysis of all of our operating lease liabilities on an undiscounted basis as of June 30, 2019 is as follows (in millions): Year Maturity Analysis of Operating Lease Liabilities July through December 2019 $ 2 2020 4 2021 4 2022 3 2023 3 2024 3 Thereafter 64 $ 83 The difference between the undiscounted contractual payments of $83 million above and the June 30, 2019 operating lease liabilities of $28 million (included in our “accounts payable and accrued liabilities”) is the present value of imputed interest. Contractual payments include base rents that have been contractually reset based on inflation indexes as of June 30, 2019. For the three months ended June 30, 2019, total rent expense included in property tax, insurance and other expenses in our condensed consolidated statement of operations was $1 million, of which $0.3 million related to variable rents. For the three months ended June 30, 2018, total rent expense was $1 million, of which $0.3 million related to variable rents. For the three months ended June 30, 2019, our short-term lease expense was $0.1 million. Differences between amounts expensed and cash paid were not significant. For the six months ended June 30, 2019, total rent expense included in property tax, insurance and other expenses in our condensed consolidated statement of operations was $2 million, of which $0.4 million related to variable rents. For the six months ended June 30, 2018, total rent expense was $2 million, of which $0.4 million related to variable rents. For the six months ended June 30, 2019, our short-term lease expense was $0.2 million. Differences between amounts expensed and cash paid were not significant. In accordance with ASC Topic 840, Leases, future minimum non-cancellable payments for all of our operating leases as of December 31, 2018 were as follows (in millions): Year Maturity Analysis of Operating Lease Liabilities 2019 $ 3 2020 3 2021 3 2022 2 2023 2 Thereafter 98 $ 111 The differences in amounts from future payments as of June 30, 2019 compared to December 31, 2018 are primarily due to differences in the definitions and determinations of lease term and variable lease payments under the new lease accounting standard and new leases subsequent to January 1, 2019. |
Supplemental Disclosures of Cas
Supplemental Disclosures of Cash Flow Information | 6 Months Ended |
Jun. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosures of Cash Flow Information | NOTE 17. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION The following table presents the supplemental cash flow information for the six months ended June 30, 2019 and 2018 (in millions): Six Months Ended June 30, 2019 2018 Supplemental cash flow information: Interest paid during the period $ 28 $ 54 Income taxes paid during the period, net of refunds 1 1 Supplemental non-cash disclosure: Capital expenditures included in accounts payable $ 6 $ 5 Construction in progress transferred to gross operating real estate 9 — Cash flow hedge adjustment, net of tax — 1 Casualty receivable related to real estate — 3 Dividends payable on common stock 11 — Recognition of right of use operating lease assets and operating lease liabilities 28 — Financing of property insurance prepaids 14 — Escrowed casualty insurance proceeds 4 — |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 18. SUBSEQUENT EVENTS On May 14, 2019, our board of directors authorized and the Company declared a cash dividend of $0.20 per share of common stock with respect to the second quarter of 2019. The second quarter dividend was paid on July 15, 2019 to stockholders of record as of June 28, 2019. On August 13, 2019, our board of directors authorized and the Company declared a cash dividend of $0.20 per share of common stock with respect to the third quarter of 2019. The third quarter dividend will be paid on October 15, 2019 to stockholders of record as of September 30, 2019. Subsequent to June 30, 2019, the Company sold, in separate transactions, seven hotels for an aggregate gross sales price of $29 million, recognizing a gain on sales of approximately $5 million. The Company used $10 million of the net sales proceeds to pay down the principal of the CMBS Facility. |
Significant Accounting Polici_2
Significant Accounting Policies and Recently Issued Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Interim Unaudited Financial Information | Interim Unaudited Financial Information The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our consolidated financial position as of June 30, 2019 and December 31, 2018, and our consolidated results of operations and cash flows for the periods ended June 30, 2019 and 2018. Interim results are not necessarily indicative of full-year performance, as a result of the impact of seasonal and other short-term activities and the dispositions of hotel properties. The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K. Subsequent to May 30, 2018, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company. The historical unaudited condensed consolidated financial statements as of and through May 30, 2018 represent the financial position and results of operations of entities that were under the common control of the accounting predecessor, LQH Parent. The accompanying condensed consolidated financial statements include the accounts of the Company, as well as its wholly-owned subsidiaries and any consolidated variable interest entities (“VIEs”). We recognize noncontrolling interests for the proportionate share of operations for ownership interests not held by our stockholders. All intercompany transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items as: Spin-Off related adjustments; income taxes; impairment of long-lived assets; casualty losses; fair value evaluations; depreciation and amortization; and equity-based compensation measurements. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain line items on the condensed consolidated statements of operations for the three and six months ended June 30, 2018 have been reclassified to conform to the current period presentation following the Spin-Off. These reclassifications had no impact on our net income (loss) or financial position and were made in order to conform to presentations consistent with other REIT lodging companies, combine immaterial amounts and reflect the results of discontinued operations. See Note 3 “Discontinued Operations” for additional information. |
Investment in Real Estate | Investment in Real Estate Property and equipment and other investments in real estate are stated at cost less accumulated depreciation computed using a straight-line method over the following estimated useful life of each asset: Buildings and improvements 5 to 40 years Furniture, fixtures and other equipment 2 to 10 years Leasehold improvements are depreciated over the shorter of the underlying lease term or the useful lives of the related assets. We capitalize expenditures that increase the overall value of an asset or extend an asset’s life, typically associated with hotel refurbishment, renovation, and major repairs. Such costs primarily include third party contract labor, materials, professional design and other direct costs, and during the redevelopment and renovation period interest, real estate taxes and insurance costs. The interest, real estate taxes and insurance capitalization period begins when the activities related to the development have begun and ceases when the project is substantially complete and the assets are held available for use or occupancy. Once such a project is substantially complete and the associated assets are ready for intended use, interest, real estate taxes and insurance costs are no longer capitalized. Normal maintenance and repair costs are expensed as incurred. |
Impairment of Real Estate Related Assets | Impairment of Real Estate Related Assets If events or circumstances indicate that the carrying amount of a property may not be recoverable over our expected holding period, we make an assessment of the property’s recoverability by comparing the carrying amount of the asset to our estimate of the aggregate undiscounted future operating cash flows expected to be generated over the holding period of the asset including its eventual disposition. If the carrying amount exceeds the aggregate undiscounted future operating cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Any such impairment is treated for accounting purposes similar to an asset acquisition at the estimated fair value, which includes the elimination of the asset’s accumulated depreciation and amortization. We did not record any impairment loss for the three or six months ended June 30, 2019 or 2018. |
Assets Held for Sale | Assets Held for Sale For sales of real estate or assets classified as held for sale, we evaluate whether the disposition will have a major effect on our operations and financial results and will therefore qualify as a strategic shift. If the disposition represents a strategic shift, it will be classified as discontinued operations in our financial statements for all periods presented. If the disposition does not represent a strategic shift, it will be presented in continuing operations in our financial statements. The Company classifies assets as held for sale when criteria are met in accordance with GAAP. At that time, we present the assets and obligations associated with the real estate held for sale separately in our condensed consolidated balance sheet, and we cease recording depreciation and amortization expense related to that asset. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. |
Cash and Cash Equivalents | Cash and Cash Equivalents We classify all cash on hand, demand deposits with financial institutions, and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair market value. We classify cash and cash equivalents as restricted cash when contractual agreements or arrangements impose restrictions on our ability to freely access and utilize the cash and cash equivalent amounts. |
Accounts Receivable | Accounts Receivable Accounts receivable primarily consists of receivables due from hotel guests, credit card companies and insurance settlements and are carried at estimated collectable amounts. We periodically evaluate our receivables for collectability based on historical experience, the length of time receivables are past due and the financial condition of the debtor. Accounts receivable are written off when collection is not probable and collection efforts have generally ceased. We record uncollectible operating lease receipts as a direct offset to room revenues. We record uncollectible other customer revenues to bad debt expense. Our insurance settlement receivables included in accounts receivable are recorded based upon the terms of our insurance policies and our estimates of insurance losses. We recognize business interruption claims as revenue when collected and accordingly our accounts receivable do not include any amounts related to estimated business interruption claim recoveries. As of June 30, 2019 and December 31, 2018, the Company had $9 million and $13 million of insurance settlement receivables, respectively. |
Debt and Deferred Debt Issuance Costs | Debt and Deferred Debt Issuance Costs Deferred debt issuance costs include costs incurred in connection with issuance of debt, including costs associated with the entry into our loan agreements and revolving credit facility, and are presented as a direct reduction from the carrying amount of debt. These debt issuance costs are deferred and amortized to expense on a straight-line basis over the term of the debt, which approximates the effective interest amortization method. This amortization expense is included as a component of interest expense. When debt is paid prior to its scheduled maturity date and the underlying terms are materially modified, the remaining carrying value of deferred debt issuance costs, along with certain other payments to lenders, is included in loss on extinguishment of debt. |
Lessee Accounting | Lessee Accounting We adopted Accounting Standards Codification (“ASC”) Topic 842, Leases, effective January 1, 2019. See “Newly Adopted Accounting Standards” below. We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for ground leases and our corporate office lease, where the asset is classified within “right of use assets” and the operating lease liability is classified within “other liabilities” in our consolidated balance sheets. We elected the practical expedient to combine our lease and related non-lease components by class of asset and made the election for our ground leases and our corporate office lease. Right of use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right of use assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our variable lease payments consist of payments based on a rate or index established subsequent to the lease commencement date and non-lease services related to the ground lease, primarily real estate taxes. Variable lease payments are excluded from the right of use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date on a fully levered basis in determining the present value of lease payments. Extension options on our leases are included in our minimum lease terms when they are reasonably certain to be exercised. In our evaluation of the lease term, we consider other arrangements, primarily our debt and franchise agreements, which may have economic consequences related to failure to renew certain ground leases. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. At January 1, 2019, we elected the short-term lease recognition exemption and applied it to our short-term corporate office lease because the remaining term had a lease term of less than twelve months. In May 2019, this lease terminated and was replaced by a long-term corporate office lease. We are not a lessee for any other significant leases. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or pay to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In evaluating the fair value of both financial and non-financial assets and liabilities, GAAP establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations in this category are inherently less reliable than quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies and the applicable underlying observable market assumptions. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. These inputs cannot be validated by readily determinable market data and generally involve considerable judgment by management. We use the highest level of observable market data if such data is available without undue cost and effort. |
Derivative Instruments | Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (“Cash Flow Hedge”), a hedge of the fair value of a recognized asset or liability (“Fair Value Hedge”), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Cash Flow Hedge are recorded in the condensed consolidated statements of comprehensive income (loss) until they are reclassified into earnings when the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Fair Value Hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the condensed consolidated statements of cash flows. Changes in fair value of undesignated hedge instruments are recorded in current period earnings. As of June 30, 2019, our only derivative, an interest rate cap, is an undesignated hedge instrument. |
Revenue Recognition | Revenue Recognition We adopted ASC Topic 606, Revenue from Contracts with Customers , We also adopted ASC Topic 842, Leases, effective January 1, 2019, using the modified retrospective transition method. There was no material impact to revenues or continuing operations in our financial statements due to the change in either of these accounting policies. The i Our revenues primarily consist of operating lease revenues from room rentals, which are accounted for under GAAP in accordance with lease accounting standards. Room revenue is recognized as earned on a daily basis, net of customer incentive discounts, cash rebates, and refunds. Other lease revenues primarily include lease revenue from restaurants, billboards and cell towers, all of which are operating leases. Such leases are recognized on a straight-line basis over the term of the lease when collections are considered probable and as earned and collected when collections are not considered probable. Uncollectible lease amounts are recorded as a direct offset to revenues. As a lessor, our operating leases do not contain purchase options or require significant assumptions or judgments. Some of our operating leases contain extension options. For those with extension options we assess the likelihood such options will be exercised in determining the lease term. Customer revenues include other hotel guest revenues generated by the incidental support of hotel operations and are recognized under the revenue accounting standard as the service obligation is completed. |
Purchase of Common Stock | Purchase of Common Stock Purchases of common stock are recorded on the trade date at cost, including commissions and other costs, through a removal of the stated par value with the excess recorded as additional paid-in-capital. |
Equity-Based Compensation | Equity-Based Compensation We have a stock-based incentive award plan for our employees and directors, which primarily includes time-based and performance-based awards. We recognize the cost of services received in an equity-based payment transaction with an employee or director as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. Measurement for these equity awards is the estimated fair value at the grant date of the equity instruments. The equity-based compensation expense is recognized for awards earned or expected to be earned. Accordingly, the compensation expense for all equity awards is recognized straight-line over the vesting period of the last separately identified vesting portion of the award. Forfeitures for time-based and market-based performance awards are recognized as they occur. Performance awards with targets other than market-based are assessed at each balance sheet date with respect to the expected achievement of the target. Equity-based compensation expense is classified in corporate general and administrative expenses. Dividend equivalent cash payments related to unvested employee and director awards are charged to general and administrative expenses. Dividends awarded as additional stock grants are included in equity-based compensation expense. |
Income Taxes | Income Taxes Subsequent to the Spin-Off, we are organized in conformity with, and operate in a manner that will allow us to elect to be taxed as a REIT for U.S. federal income tax purposes. To the extent we qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders. Accordingly, no provision for U.S. federal income tax expense has been included in our accompanying condensed consolidated financial statements for the three and six months ended June 30, 2019 and for the period from the Spin-Off to June 30, 2018 related to our REIT operations; however, our TRS is subject to U.S. federal, state and local income taxes and our REIT may be subject to state and local taxes. The Company was also subject to U.S. federal, state, local and foreign income taxes prior to the Spin-Off. The Company uses the asset and liability method of accounting for income taxes. Under this method, current income tax expense represents the amounts expected to be reported on the Company’s income tax returns, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be applied to taxable income in the years in which those temporary differences are expected to reverse. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was enacted into law. The Tax Act significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing limitations on net operating loss (“NOL”) carryovers, and allowing ordinary dividend income from a REIT to be eligible for a 20% qualified business income deduction. The Tax Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018, and accordingly, we have measured our federal tax expense at 21%. |
Concentrations of Credit Risk and Business Risk | Concentrations of Credit Risk and Business Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents. We utilize financial institutions that we consider to be of high credit quality and consider the risk of default to be minimal. We also monitor the credit-worthiness of our customers and financial institutions before extending credit or making investments. Certain balances in cash and cash equivalents exceed the Federal Deposit Insurance Corporation limit of $250,000; however, we believe credit risk related to these deposits is minimal. Substantially all of our revenues are derived from our lodging operations and our wholly-owned hotels. Lodging operations are particularly sensitive to adverse economic and competitive conditions and trends, which could adversely affect the Company’s business, financial condition and results of operations. We have a concentration of hotels operating in Texas, Florida and California. The number of hotels and percentages of total hotels as of June 30, 2019 and December 31, 2018, and the percentages of our total revenues, excluding revenue from discontinued operations, from these states for the six months ended June 30, 2019 and year ended December 31, 2018 is as follows: June 30, 2019 December 31, 2018 Number of Hotels Percentage of Total Hotels Percentage of Total Revenue Number of Hotels Percentage of Total Hotels Percentage of Total Revenue Texas 68 22 % 21 % 68 22 % 22 % Florida 49 16 % 18 % 49 16 % 14 % California 21 7 % 10 % 21 6 % 11 % Total 138 45 % 49 % 138 44 % 47 % Our geographic concentration did not significantly change from June 30, 2018 to December 31, 2018. |
Segment Reporting | Segment Reporting Our hotel investments have similar economic characteristics and our service offerings and delivery of services are provided in a similar manner, using the same types of facilities and similar technologies. Our chief operating decision maker, the Company's Chief Executive Officer, reviews our financial information on an aggregated basis. As a result, we have concluded that we have one . |
Principal Components of Expenses | Principal Components of Expenses As more fully explained in Note 16, “Commitments and Contingencies – Hotel Management and Franchise Agreements,” a third-party management company is responsible for the day to day operations of our hotels. For many expenses, the manager directly contracts for the services in the capacity as a principal, and we reimburse our manager in accordance with the agreements. We present the following expense components and only classify the fee portion of expense as management and royalty fees. We classify all amounts owed to our manager and the franchisor in accounts payable and accrued expenses. Rooms —These expenses include hotel expenses of housekeeping, reservation systems (per our franchise agreements), room, breakfast and other room supplies and front desk costs. Other departmental and support— These expenses include labor and other expenses that constitute non-room operating expenses, including parking, telecommunications, non-room supplies, on-site administrative departments, sales and marketing, loyalty program, recurring repairs and maintenance and utility expenses. Property tax, insurance and other— These expenses consist primarily of real and personal property taxes, other local taxes, operating lease ground rent and insurance. (Gain) loss on sales of real estate, casualty and other, net —This net activity primarily includes gains from our sales of real estate, casualty losses incurred resulting from property damage or destruction caused by any sudden, unexpected or unusual event such as a hurricane or significant casualty in excess of related insurance proceeds and other real estate disposition related activity. |
Newly Issued and Recently Adopted Accounting Standards | Newly Issued Accounting Standards In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements for fair value measurements. While some disclosures have been removed or modified, new disclosures have been added. The guidance is effective for us January 1, 2020. We are currently evaluating the impact of this guidance on our financial position, results of operations and related disclosures, but do not expect the implementation of this guidance to have a material impact on our condensed consolidated financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income but excludes operating lease receivables. The guidance is currently expected to primarily apply to our trade and casualty insurance claim receivables and any other future financial assets that have the contractual right to receive cash that we may acquire in the future. Recently Effective January 1, 2019, we adopted ASC Topic 842, Leases, which established new lease accounting standards for lessees and lessors. For lessees, the new standard requires balance sheet recognition of a right of use asset and lease liability for virtually all leases. At adoption, this primarily related to our ground leases. The amount recognized is generally equal to the present value of the lease payments, based on our incremental borrowing rate. In determining our incremental borrowing rate, we considered fully leveraged secured real estate borrowings. For lessors, the new standard requires leases to be classified as operating or sales type. All of our leases are, and are anticipated to be, operating leases. Operating leases under the new standard are generally accounted for consistently with the prior lease accounting standards. We adopted the new standard using the following practical expedients and policy adoptions: • Modified retrospective transition method, where lease balances as of the adoption date are based on the remaining lease payments as previously accounted for. • Periods prior to the period of adoption are not restated, including disclosures. • The lease classification and direct costs for leases in place as of the date of adoption are not reassessed, including land easements. • Lease term at the date of adoption is based on all known facts as of the adoption date. • For leases where we are the lessor, no separation of a lease into a lease and non-lease component, as provided in the practical expedient. Amounts related to sales taxes collected by us and remitted to the taxing authorities are not included in room revenues or expense. Insurance and real estate taxes where the lessee is directly responsible for the payment to the vendor or taxing authority are also not included in revenue or expense. • For leases where we are the lessee, the short-term lease exception for leases with a remaining term of less than one year. As a lessee, our recognition of lease revenue was substantively consistent with previous guidance and, accordingly, the adoption of the lessor portion of the new standard did not have a material effect on our financial statements. As a lessee, the adoption of the new lease standard resulted in the recognition of right of use assets and lease liabilities, primarily related to our ground leases. As of January 1, 2019, right of use assets and lease liabilities of $27 million and an increase of $1 million to retained earnings were recognized. For the three and six months ended June 30, 2019, the new standard did not have a material effect on our statement of operations. See Note 10 “Revenue” and Note 16 “Commitments and Contingencies” for additional information on our lease accounting . Effective January 1, 2019, we adopted ASU 2018-07, Compensation – Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this standard, most of the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. The Company accounts for its share-based payments to members of its board of directors in the same manner as share-based payments to its employees. Other than to members of our board of directors, the Company does not award share-based payments to any nonemployees. The adoption of this standard did not have a material effect on our financial statements. Effective January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers. The revised guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded prior revenue recognition guidance, including industry-specific revenue guidance. The revised guidance replaced most existing revenue and real estate sale recognition guidance in GAAP. The standard specifically excludes lease contracts, which is our primary recurring revenue source; however, our revenue accounting for incidental hotel revenue will follow the revised guidance. We adopted the new standard using the modified retrospective transition method, where financial statement presentations prior to the date of adoption are not adjusted. Transactions that were not closed as of the adoption date were adjusted to reflect the new standard and we recorded a net reduction to opening retained earnings of approximately $15 million, net of tax, which relates primarily to our discontinued operations From time to time, new accounting standards are issued by the FASB or other standards-setting bodies, which we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently adopted or recently issued standards that are not yet effective have not or will not have a material impact on our consolidated financial statements upon adoption. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Number of Owned and Joint Venture Hotels and Number of Rooms at Such Hotels | The following table sets forth the number of owned and joint venture hotels and approximate number of rooms at such hotels as of June 30, 2019 and December 31, 2018, respectively: June 30, 2019 December 31, 2018 # of hotels # of rooms # of hotels # of rooms Owned (1) 307 39,300 314 40,200 Joint Venture 1 200 1 200 Totals 308 39,500 315 40,400 (1) As of December 31, 2018, owned hotels include one hotel designated as assets held for sale. No hotels were designated as assets held for sale as of June 30, 2019. |
Significant Accounting Polici_3
Significant Accounting Policies and Recently Issued Accounting Standards (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Property Plant and Equipment Estimated Useful Life | Property and equipment and other investments in real estate are stated at cost less accumulated depreciation computed using a straight-line method over the following estimated useful life of each asset: Buildings and improvements 5 to 40 years Furniture, fixtures and other equipment 2 to 10 years |
Summary of the Number of Hotels, Percentages of Total Hotels and Total Revenues, Excluding Revenue from Discontinued Operations | The number of hotels and percentages of total hotels as of June 30, 2019 and December 31, 2018, and the percentages of our total revenues, excluding revenue from discontinued operations, from these states for the six months ended June 30, 2019 and year ended December 31, 2018 is as follows: June 30, 2019 December 31, 2018 Number of Hotels Percentage of Total Hotels Percentage of Total Revenue Number of Hotels Percentage of Total Hotels Percentage of Total Revenue Texas 68 22 % 21 % 68 22 % 22 % Florida 49 16 % 18 % 49 16 % 14 % California 21 7 % 10 % 21 6 % 11 % Total 138 45 % 49 % 138 44 % 47 % Our geographic concentration did not significantly change from June 30, 2018 to December 31, 2018. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Summary of Hotel Franchise and Hotel Management Business Presented as Discontinued Operations | The following table summarizes the results of the hotel franchise and hotel management business which are presented as discontinued operations for the three and six months ended June 30, 2018 (in millions): Three Months Ended Six Months Ended June 30, 2018 FRANCHISE, MANAGEMENT AND OTHER FEE BASED REVENUES $ 25 $ 58 OPERATING EXPENSES Corporate, general, administrative and marketing 36 64 Depreciation and amortization 2 4 Total Operating Expenses 38 68 Operating Loss (13 ) (10 ) OTHER EXPENSES: Interest expense (6 ) (15 ) Loss on extinguishment of debt (7 ) (7 ) Total Other Expenses (13 ) (22 ) Loss Before Income Taxes (26 ) (32 ) Income tax benefit 6 7 Loss from Discontinued Operations, net of tax $ (20 ) $ (25 ) |
Summary of Selected Financial Information of LQH Parent Included in Condensed Consolidated Statements of Cash Flows | As such, the following table presents selected financial information of LQH Parent included in the condensed consolidated statements of cash flows for the six months ended June 30, 2018 (in millions): Non-cash items included in net income (loss): Depreciation and amortization $ 4 Amortization of deferred costs 1 Loss on extinguishment of debt 7 Equity-based compensation expense 4 Investing activities: Capital expenditures $ 11 |
Other Assets (Tables)
Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Assets [Abstract] | |
Schedule of Other Assets | The following table presents other assets as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Lender and other escrows $ 27 $ 20 Prepaid expenses 15 6 Intangible assets, net 4 5 Federal and state tax receivables — 4 Assets held for sale — 3 Other assets, primarily hotel supplies 14 16 Total other assets $ 60 $ 54 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | The following table presents the carrying amount of our debt as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Interest Rate as of June 30, 2019 (1) Maturity Date CMBS Facility $ 1,016 $ 1,035 One-month LIBOR + 2.75% June 2020 (2) Revolving Facility — — One-month LIBOR + 4.50% May 2020 (3) 1,016 1,035 Less deferred finance costs (14 ) (21 ) Total debt, net $ 1,002 $ 1,014 (1) One-month LIBOR at June 30, 2019 was 2.40%. (2) After maturity in 2020, includes five one-year extension options at the Company’s option, provided there is no event of default existing as of the commencement of the applicable extension period and the CorePoint CMBS Borrower (as defined below) either extends the current interest rate cap or purchases a new interest rate cap covering the extension period at a strike price as set forth in the CMBS Loan Agreement. (3) After maturity in 2020, includes a one-year extension option at the Company’s option, subject to certain conditions, including that the maturity of the CMBS Facility be extended to a date no earlier than the maturity of the Revolving Facility. |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables And Accruals [Abstract] | |
Summary of Accounts Payable, Accrued Expenses and Other Liabilities | Accounts payable, accrued expenses and other liabilities include the following as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Due to hotel manager $ 49 $ 44 Real estate taxes 20 23 Sales and occupancy taxes 11 8 Interest 3 3 Other accounts payable and accrued expenses 18 21 Total accounts payable and accrued expenses $ 101 $ 99 Operating lease liabilities (1) $ 28 $ — Property insurance financing 9 — Below market leases, net 6 6 Other liabilities 8 5 Total other liabilities $ 51 $ 11 (1) As of June 30, 2019, the incremental borrowing rate and the remaining maturity for our ground leases and corporate office lease was a weighted average of 8.6% and 29 years. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenues [Abstract] | |
Schedule of Revenue Components | Revenue for the three and six months ended June 30, 2019 is comprised of the following components (in millions): Three Months Ended Six Months Ended June 30, 2019 Operating lease revenues: Rooms $ 215 $ 419 Other 2 3 Total lease revenues 217 422 Customer revenues 2 5 Total revenues $ 219 $ 427 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense | The following table presents the Company’s income tax expense for the three and six months ended June 30, 2019 and 2018 (in millions): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Current tax expense $ (2 ) $ — $ (7 ) $ (1 ) Deferred tax benefit (expense) 1 (2 ) 1 — Total income tax expense $ (1 ) $ (2 ) $ (6 ) $ (1 ) |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Activity of RSAs, RSUs and PSUs | The following table summarizes the activity of our RSAs, RSUs and PSUs during the six months ended June 30, 2019 (because of the Spin-Off and the stock compensation restructuring described above, activity prior to 2019 is not presented) RSAs PSUs RSUs Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Outstanding at January 1, 2019 884,068 $ 20.50 — $ — 14,624 $ 5.77 Granted 428,865 11.04 447,527 6.99 478 12.49 Vested (245,601 ) 15.37 — — (9,611 ) 6.04 Forfeited (51,540 ) 15.61 (73,694 ) 6.99 — — Outstanding at June 30, 2019 1,015,792 $ 17.99 373,833 $ 6.99 5,491 $ 5.89 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerators and Denominators Used for Computation of Basic and Diluted Earnings (Loss) Per Share | The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2019 and 2018 (in millions, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Numerator: Loss from Continuing Operations, net of tax $ (19 ) $ (28 ) $ (46 ) $ (38 ) Loss from Discontinued Operations, net of tax — (20 ) — (25 ) Net loss $ (19 ) $ (48 ) $ (46 ) $ (63 ) Denominator: Weighted average number of shares outstanding, basic 57.0 58.3 57.8 58.2 Weighted average number of shares outstanding, diluted 57.0 58.3 57.8 58.2 Basic and diluted loss per share from continuing operations $ (0.32 ) $ (0.48 ) $ (0.80 ) $ (0.65 ) Basic and diluted loss per share from discontinued operations — (0.34 ) — (0.43 ) Basic and diluted loss per share $ (0.32 ) $ (0.82 ) $ (0.80 ) $ (1.08 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities | For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows as of June 30, 2019 and December 31, 2018 (in millions): June 30, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value Debt - CMBS Facility ( 1)(2) $ 1,016 $ 1,016 $ 1,035 $ 1,035 Mandatorily redeemable preferred shares ( 1) 15 15 15 15 (1) Classified as Level 3 under the fair value hierarchy. (2) Carrying amount excludes deferred finance costs of $14 million as of June 30, 2019 and $21 million as of December 31, 2018. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Contractual Maturity of All Operating Lease Liabilities on Undiscounted Basis | The contractual maturity analysis of all of our operating lease liabilities on an undiscounted basis as of June 30, 2019 is as follows (in millions): Year Maturity Analysis of Operating Lease Liabilities July through December 2019 $ 2 2020 4 2021 4 2022 3 2023 3 2024 3 Thereafter 64 $ 83 |
Schedule of Future Minimum Non-Cancellable Payment for Operating Leases | In accordance with ASC Topic 840, Leases, future minimum non-cancellable payments for all of our operating leases as of December 31, 2018 were as follows (in millions): Year Maturity Analysis of Operating Lease Liabilities 2019 $ 3 2020 3 2021 3 2022 2 2023 2 Thereafter 98 $ 111 |
Supplemental Disclosures of C_2
Supplemental Disclosures of Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Summary of Supplemental Cash Flow Information | The following table presents the supplemental cash flow information for the six months ended June 30, 2019 and 2018 (in millions): Six Months Ended June 30, 2019 2018 Supplemental cash flow information: Interest paid during the period $ 28 $ 54 Income taxes paid during the period, net of refunds 1 1 Supplemental non-cash disclosure: Capital expenditures included in accounts payable $ 6 $ 5 Construction in progress transferred to gross operating real estate 9 — Cash flow hedge adjustment, net of tax — 1 Casualty receivable related to real estate — 3 Dividends payable on common stock 11 — Recognition of right of use operating lease assets and operating lease liabilities 28 — Financing of property insurance prepaids 14 — Escrowed casualty insurance proceeds 4 — |
Organization and Basis of Pre_3
Organization and Basis of Presentation - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Spin-off date | May 30, 2018 |
Organization and Basis of Pre_4
Organization and Basis of Presentation - Summary of Number of Owned and Joint Venture Hotels and Number of Rooms at Such Hotels (Detail) | Jun. 30, 2019HotelRoom | Dec. 31, 2018HotelRoom |
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 308 | 315 |
Number of rooms | Room | 39,500 | 40,400 |
Owned [Member] | ||
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 307 | 314 |
Number of rooms | Room | 39,300 | 40,200 |
Joint Venture [Member] | ||
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 1 | 1 |
Number of rooms | Room | 200 | 200 |
Organization and Basis of Pre_5
Organization and Basis of Presentation - Summary of Number of Owned and Joint Venture Hotels and Number of Rooms at Such Hotels (Parenthetical) (Detail) - Hotel | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Number of hotels held for sale | 0 | 1 |
Significant Accounting Polici_4
Significant Accounting Policies and Recently Issued Accounting Standards - Summary of Property and Equipment (Detail) | 6 Months Ended |
Jun. 30, 2019 | |
Buildings and Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Buildings and Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 40 years |
Furniture, Fixtures and Other Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 2 years |
Furniture, Fixtures and Other Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 10 years |
Significant Accounting Polici_5
Significant Accounting Policies and Recently Issued Accounting Standards - Additional Information (Detail) | Jan. 01, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($)Segment | Jun. 30, 2018USD ($) | Dec. 31, 2017 | Dec. 31, 2018USD ($) | Jan. 01, 2018USD ($) |
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Expense on impairment of real estate assets | $ 0 | $ 0 | $ 0 | $ 0 | |||||||
Insurance settlements receivable | 9,000,000 | 9,000,000 | $ 13,000,000 | ||||||||
Income tax provision (benefits) | $ 1,000,000 | $ 2,000,000 | $ 6,000,000 | $ 1,000,000 | |||||||
Corporate income tax rate | 21.00% | 21.00% | 35.00% | ||||||||
REIT dividends qualified business income deduction | 20.00% | 20.00% | |||||||||
Federal deposit insurance corporation limit | $ 250,000 | $ 250,000 | |||||||||
Number of reportable business segment | Segment | 1 | ||||||||||
Number of operating segments | Segment | 1 | ||||||||||
Right of use assets | 28,000,000 | $ 28,000,000 | |||||||||
Lease liabilities | 28,000,000 | 28,000,000 | |||||||||
Retained earnings | $ 1,000,000 | $ (15,000,000) | |||||||||
ASC Topic 842 [Member] | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Right of use assets | $ 27,000,000 | ||||||||||
Lease liabilities | 27,000,000 | ||||||||||
Retained earnings | $ 1,000,000 | ||||||||||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after ASC Topic 606 [Member] | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Decrease in retained earnings | $ (15,000,000) | ||||||||||
REIT [Member] | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Income tax provision (benefits) | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici_6
Significant Accounting Policies and Recently Issued Accounting Standards - Summary Of The Number of Hotels, Percentages of Total Hotels And Total Revenues, Excluding Revenue from Discontinued Operations (Detail) - Hotel | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | ||
Number of Hotels | 138 | 138 |
Percentage of Total Hotels | 45.00% | 44.00% |
Percentage of Total Revenue | 49.00% | 47.00% |
Texas | ||
Concentration Risk [Line Items] | ||
Number of Hotels | 68 | 68 |
Percentage of Total Hotels | 22.00% | 22.00% |
Percentage of Total Revenue | 21.00% | 22.00% |
Florida | ||
Concentration Risk [Line Items] | ||
Number of Hotels | 49 | 49 |
Percentage of Total Hotels | 16.00% | 16.00% |
Percentage of Total Revenue | 18.00% | 14.00% |
California | ||
Concentration Risk [Line Items] | ||
Number of Hotels | 21 | 21 |
Percentage of Total Hotels | 7.00% | 6.00% |
Percentage of Total Revenue | 10.00% | 11.00% |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Detail) - USD ($) | 6 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | May 30, 2018 | |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||
Stockholders' equity, reverse stock split | as of May 18, 2018, received one share of CorePoint common stock for each share of LQH Parent common stock held after giving effect to the reverse stock split. | ||
Common Stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
LQH Parent [Member] | |||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||
Stockholders' equity, reverse stock split | Each holder of LQH Parent common stock received one share of CorePoint common stock for each share of LQH Parent common stock. | ||
Common Stock, par value | $ 0.02 | ||
Gain or loss on separation of disposed net assets and liabilities | $ 0 | ||
Disposal group including discontinued operation, reserve for estimated taxes | $ 240,000,000 |
Discontinued Operations - Summa
Discontinued Operations - Summary of Hotel Franchise and Hotel Management Business Presented as Discontinued Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
OTHER EXPENSES: | ||
Loss on extinguishment of debt | $ (10) | $ (10) |
Income tax benefit | (7) | |
Loss from Discontinued Operations, net of tax | (20) | (25) |
Discontinued Operations [Member] | ||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
FRANCHISE, MANAGEMENT AND OTHER FEE BASED REVENUES | 25 | 58 |
OPERATING EXPENSES | ||
Corporate, general, administrative and marketing | 36 | 64 |
Depreciation and amortization | 2 | 4 |
Total Operating Expenses | 38 | 68 |
Operating Loss | (13) | (10) |
OTHER EXPENSES: | ||
Interest expense | (6) | (15) |
Loss on extinguishment of debt | (7) | (7) |
Total Other Expenses | (13) | (22) |
Loss Before Income Taxes | (26) | (32) |
Income tax benefit | 6 | 7 |
Loss from Discontinued Operations, net of tax | $ (20) | $ (25) |
Discontinued Operations - Sum_2
Discontinued Operations - Summary of Selected Financial Information of LQH Parent Included in Condensed Consolidated Statements of Cash Flows (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Non-cash items included in net income (loss): | ||
Depreciation and amortization | $ 90 | $ 79 |
Loss on extinguishment of debt | (17) | |
Equity-based compensation expense | $ 6 | 6 |
LQH Parent [Member] | Discontinued Operations [Member] | ||
Non-cash items included in net income (loss): | ||
Depreciation and amortization | 4 | |
Amortization of deferred costs | 1 | |
Loss on extinguishment of debt | 7 | |
Equity-based compensation expense | 4 | |
Investing activities: | ||
Capital expenditures | $ 11 |
Investments In Real Estate - Ad
Investments In Real Estate - Additional Information (Detail) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($)Hotel | Jun. 30, 2018USD ($)Hotel | Jun. 30, 2019USD ($)Hotel | Jun. 30, 2018USD ($)Hotel | |
Real Estate Properties [Line Items] | ||||
Number of hotels classified as investment in real estate sold | Hotel | 3 | 0 | 5 | 1 |
Proceeds from sale of hotel | $ 16 | $ 21 | $ 5 | |
Gain (loss) on sales of hotels | 2 | 2 | 0.5 | |
Buildings and Improvements, Furniture, Fixtures and Other Equipment [Member] | ||||
Real Estate Properties [Line Items] | ||||
Depreciation | $ 46 | $ 39 | $ 90 | $ 76 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Other Assets [Abstract] | ||
Lender and other escrows | $ 27 | $ 20 |
Prepaid expenses | 15 | 6 |
Intangible assets, net | 4 | 5 |
Federal and state tax receivables | 4 | |
Assets held for sale | 3 | |
Other assets, primarily hotel supplies | 14 | 16 |
Total other assets | $ 60 | $ 54 |
Other Assets - Additional Infor
Other Assets - Additional Information (Detail) | May 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($)Hotel | Dec. 31, 2018USD ($)Hotel |
Other Assets [Line Items] | ||||
Number of hotels classified as assets held for sale | Hotel | 0 | 1 | ||
Gross proceeds from sale of hotel classified as assets held for sale | $ 3,000,000 | |||
Gain on sale of hotel classified as assets held for sale | $ 0 | |||
CMBS Loan Agreement [Member] | ||||
Other Assets [Line Items] | ||||
Aggregate notional amount | $ 1,035,000,000 | |||
LIBOR floor percentage | 3.25% | |||
Interest rate swap agreement expiration date | Jul. 15, 2020 | |||
CMBS Loan Agreement [Member] | Maximum [Member] | ||||
Other Assets [Line Items] | ||||
Net carrying amount of interest rate cap | $ 100,000 | $ 100,000 | $ 200,000 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | ||
Debt before deferred debt issuance costs and original issue discount | $ 1,016 | $ 1,035 |
Less deferred finance costs | (14) | (21) |
Total debt, net | $ 1,002 | 1,014 |
Revolving Facility [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Date | 2020-05 | |
Revolving Facility [Member] | LIBOR [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.50% | |
CMBS Facility [Member] | ||
Debt Instrument [Line Items] | ||
Debt before deferred debt issuance costs and original issue discount | $ 1,016 | 1,035 |
Less deferred finance costs | (14) | (21) |
Total debt, net | $ 1,016 | $ 1,035 |
Maturity Date | 2020-06 | |
CMBS Facility [Member] | LIBOR [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.75% |
Debt - Schedule of Long-Term _2
Debt - Schedule of Long-Term Debt (Parenthetical) (Detail) | 6 Months Ended |
Jun. 30, 2019Extension | |
LIBOR [Member] | |
Debt Instrument [Line Items] | |
Debt, base interest rate | 2.40% |
Revolving Facility [Member] | |
Debt Instrument [Line Items] | |
Extension period | 1 year |
CMBS Facility [Member] | |
Debt Instrument [Line Items] | |
Number of extension options | 5 |
Extension option period | 1 year |
Debt - Additional Information (
Debt - Additional Information (Detail) | May 30, 2018USD ($)HotelExtension | May 29, 2018USD ($) | Apr. 14, 2014 | Mar. 06, 2018 | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | May 30, 2018USD ($) | Jun. 30, 2019USD ($)Extension | Jun. 30, 2018USD ($) |
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | $ 10,000,000 | $ 10,000,000 | |||||||
Revolving Facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit facility extended expiration period | 1 year | ||||||||
Unused commitment fee percentage | 0.50% | ||||||||
Revolving Facility [Member] | LIBOR [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 4.50% | ||||||||
Revolving Facility [Member] | Core Point Borrower L L C [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior secured credit facility | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | |||||
Line of credit facility maturity date | May 30, 2020 | ||||||||
Revolving credit facility, drawn amount | $ 25,000,000 | $ 25,000,000 | |||||||
Line of credit facility extended expiration period | 1 year | ||||||||
Senior secured credit facility, remaining amount available to be drawn | 142,000,000 | $ 142,000,000 | |||||||
Revolving Facility [Member] | Minimum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of outstanding letters of credit | 10.00% | ||||||||
CMBS Loan Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | $ 10,000,000 | $ 10,000,000 | |||||||
Term Facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.75% | 3.00% | |||||||
CMBS Facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, description of variable rate basis | one-month LIBOR | ||||||||
Additional interest expense | $ 2,000,000 | ||||||||
Debt instrument, number of extension options | Extension | 5 | ||||||||
Debt instrument prepayment description | (i) all accrued interest through the end of the applicable accrual period and (ii) prior to the payment date in December 2019 a spread maintenance premium and in certain cases third party LIBOR breakage costs. | ||||||||
Spread maintenance premium for prepayments after the payment date | $ 0 | $ 0 | |||||||
Debt Instrument Debt Yield Description | The most restrictive of these conditions provide that after giving effect to such release, the debt yield for the CMBS Facility (generally defined as hotel property operating net income before interest, depreciation and less a fixed amount of corporate general and administrative expenses divided by the outstanding principal balance of the CMBS Facility, “Debt Yield”) is not less than the greater of (x) 16.44% and (y) the lesser of (i) the Debt Yield in effect immediately prior to such release and (ii) 16.94% (such result the “Release Debt Yield”). However, if such release is in connection with the sale of a property to an unrelated third party, such sold property may be released if the CMBS Borrower prepays an amount equal to the greater of (x) the allocated portion of the outstanding CMBS Facility plus a premium ranging from 5% to 10%, as defined in the CMBS Loan Agreement, and (y) the lesser of (i) the full net proceeds from the sale of the property received by the Company and (ii) the amount necessary to satisfy the Release Debt Yield. | ||||||||
Debt Instrument Debt Yield Percentage Under Condition 1 | 16.44% | ||||||||
Debt Instrument Debt Yield Percentage Under Condition 2 | 16.94% | ||||||||
Net proceeds from sale of properties for pay down debt principal | $ 19,000,000 | ||||||||
Upfront reserve deposited for lender | $ 15,000,000 | ||||||||
CMBS Facility [Member] | LIBOR [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.75% | ||||||||
CMBS Facility [Member] | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument prepayment amount, percentage | 20.00% | ||||||||
Loss related to principal pay downs | $ 100,000 | $ 100,000 | |||||||
CMBS Facility [Member] | First Five Years Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.75% | ||||||||
CMBS Facility [Member] | First Five Years Term Loan | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt Instrument Yield Percentage | 12.33% | ||||||||
CMBS Facility [Member] | Sixth Year Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.90% | ||||||||
CMBS Facility [Member] | Sixth Year Term Loan | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt Instrument Yield Percentage | 12.83% | ||||||||
CMBS Facility [Member] | Seventh Year Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 3.00% | ||||||||
CMBS Facility [Member] | Seventh Year Term Loan | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt Instrument Yield Percentage | 12.83% | ||||||||
CMBS Facility [Member] | CorePoint CMBS Borrower [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt Instrument Premium Percentage Minimum | 5.00% | ||||||||
Debt Instrument Debt Premium Percentage Maximum | 10.00% | ||||||||
CMBS Facility [Member] | CorePoint CMBS Borrower [Member] | Commercial Mortgage Backed Securities [Member] | Secured Mortgage [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of debt | $ 1,035,000,000 | $ 1,035,000,000 | |||||||
Number of owned and ground leased hotels for which excess cash flow pledge is made | Hotel | 7 | ||||||||
Debt instrument initial term | 2 years | ||||||||
Debt instrument, number of extension options | Extension | 5 | ||||||||
Debt instrument maturity date | Jun. 9, 2020 | ||||||||
Core Point Revolver Borrower | Revolving Facility [Member] | Base Rate [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 3.50% | ||||||||
Core Point Revolver Borrower | Revolving Facility [Member] | LIBOR [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 4.50% |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses and Other Liabilities - Summary of Accounts Payable, Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Payables And Accruals [Abstract] | ||
Due to hotel manager | $ 49 | $ 44 |
Real estate taxes | 20 | 23 |
Sales and occupancy taxes | 11 | 8 |
Interest | 3 | 3 |
Other accounts payable and accrued expenses | 18 | 21 |
Total accounts payable and accrued expenses | 101 | 99 |
Operating lease liabilities | 28 | |
Property insurance financing | 9 | |
Below market leases, net | 6 | 6 |
Other liabilities | 8 | 5 |
Total other liabilities | $ 51 | $ 11 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses and Other Liabilities - Summary of Accounts Payable, Accrued Expenses and Other Liabilities (Parenthetical) (Detail) - Ground Leases and Corporate Office Lease [Member] | Jun. 30, 2019 |
Accrued Liabilities Current [Line Items] | |
Weighted average incremental borrowing rate | 8.60% |
Weighted average remaining maturity period | 29 years |
Mandatorily Redeemable Prefer_2
Mandatorily Redeemable Preferred Shares - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Class Of Stock [Line Items] | ||
Proceeds from issuance of redeemable preferred stock | $ 15 | |
Series A Preferred Stock [Member] | ||
Class Of Stock [Line Items] | ||
Aggregate liquidation preference, value | $ 15 | |
Payment of cash dividend on preferred stock percentage per annum | 13.00% | |
Preferred stock leverage ratio, increase percentage | 750.00% | |
Preferred stock leverage ratio, decrease percentage | 100.00% | |
Percentage of preferred stock cash dividend required to pay if event of default occurs | 15.00% | |
Percentage of preferred stock leverage ratio increase if an event of default occurs | 16.50% | |
Wholly Owned Subsidiary of LQH Parent [Member] | Series A Preferred Stock [Member] | ||
Class Of Stock [Line Items] | ||
Number of shares issued | 15,000 | |
Preferred stock, par value | $ 0.01 | |
Proceeds from issuance of redeemable preferred stock | $ 15 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Mar. 21, 2019 | |
Equity [Abstract] | ||
Share repurchase program, authorized amount | $ 50,000,000 | |
Share repurchase program, shares acquired | 2,100,000 | |
Share repurchase program, weighted average cost per share | $ 11.70 |
Revenue - Schedule of Revenue C
Revenue - Schedule of Revenue Components (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue [Line Items] | ||||
Total revenues | $ 219 | $ 233 | $ 427 | $ 429 |
Operating Lease Revenues Rooms [Member] | ||||
Revenue [Line Items] | ||||
Total revenues | 215 | $ 228 | 419 | $ 420 |
Operating Lease Revenues Other [Member} | ||||
Revenue [Line Items] | ||||
Total revenues | 2 | 3 | ||
Operating Lease Revenues [Member] | ||||
Revenue [Line Items] | ||||
Total revenues | 217 | 422 | ||
Customer Revenues [Member] | ||||
Revenue [Line Items] | ||||
Total revenues | $ 2 | $ 5 |
Revenue - Additional Informatio
Revenue - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Revenues [Abstract] | ||
Variable lease revenue | $ 0.1 | $ 0.1 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Tax benefit related to discontinued operations | $ 7 | ||
Income tax federal statutory rate | 21.00% | 21.00% | 35.00% |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Current tax expense | $ (2) | $ (7) | $ (1) | |
Deferred tax benefit (expense) | 1 | $ (2) | 1 | |
Total income tax expense | $ (1) | $ (2) | $ (6) | $ (1) |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Detail) - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Continuing Operations [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Equity-based compensation expense recognized | $ 4,000,000 | $ 1,000,000 | $ 6,000,000 | $ 2,000,000 |
Discontinued Operations [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Equity-based compensation expense recognized | $ 0 | $ 1,000,000 | $ 0 | $ 4,000,000 |
Common Stock [Member] | Omnibus Incentive Plan [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, number of shares authorized for issuance | 8 | 8 | ||
Share-based compensation arrangement by share-based payment award, number of shares available for issuance | 6 | 6 | ||
Minimum [Member] | PSUs [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 2 years | |||
Minimum [Member] | RSAs [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Minimum [Member] | RSUs [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Maximum [Member] | PSUs [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Maximum [Member] | RSAs [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 4 years | |||
Maximum [Member] | RSUs [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 4 years |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Activity of RSAs, RSUs and PSUs (Detail) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
RSAs [Member] | |
Number of Shares | |
Beginning balance | shares | 884,068 |
Granted | shares | 428,865 |
Vested | shares | (245,601) |
Forfeited | shares | (51,540) |
Ending balance | shares | 1,015,792 |
Weighted-Average Grant Date Fair Value | |
Beginning balance | $ / shares | $ 20.50 |
Granted | $ / shares | 11.04 |
Vested | $ / shares | 15.37 |
Forfeited | $ / shares | 15.61 |
Ending balance | $ / shares | $ 17.99 |
PSUs [Member] | |
Number of Shares | |
Granted | shares | 447,527 |
Forfeited | shares | (73,694) |
Ending balance | shares | 373,833 |
Weighted-Average Grant Date Fair Value | |
Granted | $ / shares | $ 6.99 |
Forfeited | $ / shares | 6.99 |
Ending balance | $ / shares | $ 6.99 |
RSUs [Member] | |
Number of Shares | |
Beginning balance | shares | 14,624 |
Granted | shares | 478 |
Vested | shares | (9,611) |
Ending balance | shares | 5,491 |
Weighted-Average Grant Date Fair Value | |
Beginning balance | $ / shares | $ 5.77 |
Granted | $ / shares | 12.49 |
Vested | $ / shares | 6.04 |
Ending balance | $ / shares | $ 5.89 |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |||
Reverse stock split, description | as of May 18, 2018, received one share of CorePoint common stock for each share of LQH Parent common stock held after giving effect to the reverse stock split. | ||
Reverse stock split, conversion ratio | 0.5 | 0.5 |
Earnings (Loss) Per Share - Rec
Earnings (Loss) Per Share - Reconciliation of Numerators and Denominators Used for Computation of Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||||
Loss from Continuing Operations, net of tax | $ (19) | $ (28) | $ (46) | $ (38) |
Loss from Discontinued Operations, net of tax | (20) | (25) | ||
Net loss | $ (19) | $ (48) | $ (46) | $ (63) |
Denominator: | ||||
Weighted average number of shares outstanding, basic | 57 | 58.3 | 57.8 | 58.2 |
Weighted average number of shares outstanding, diluted | 57 | 58.3 | 57.8 | 58.2 |
Basic and diluted loss per share from continuing operations | $ (0.32) | $ (0.48) | $ (0.80) | $ (0.65) |
Basic and diluted loss per share from discontinued operations | (0.34) | (0.43) | ||
Basic and diluted earnings (loss) per share | $ (0.32) | $ (0.82) | $ (0.80) | $ (1.08) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||||
Interest expense | $ 18,000,000 | $ 18,000,000 | $ 36,000,000 | $ 31,000,000 | |
Gain on termination of cash flow hedge | 3,000,000 | 3,000,000 | |||
Fair Value Measurement on Nonrecurring Basis [Member] | |||||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||||
Assets fair value | 0 | 0 | 0 | 0 | |
Liabilities fair value | 0 | $ 0 | 0 | $ 0 | |
Level 2 | Maximum [Member] | |||||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||||
Assets fair value | 100,000 | 100,000 | $ 200,000 | ||
Interest expense | $ 100,000 | $ 200,000 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | $ 1,002 | $ 1,014 |
Mandatorily Redeemable Preferred Shares [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | 15 | 15 |
Debt, fair value | 15 | 15 |
CMBS Facility [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | 1,016 | 1,035 |
Debt, fair value | $ 1,016 | $ 1,035 |
Fair Value Measurements - Car_2
Fair Value Measurements - Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities (Parenthetical) (Detail) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Deferred finance costs | $ 14 | $ 21 |
CMBS Facility [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Deferred finance costs | $ 14 | $ 21 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Related Party Transaction [Line Items] | ||||||
Total interest payments | $ 28,000 | $ 54,000 | ||||
Mr. Glenn Alba [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, monthly consulting fees | $ 8 | |||||
Previously Managed Hotels [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Purchase products and services from affiliates | $ 0 | $ 0 | 0 | $ 1,000 | ||
Senior Secured Term Loan Facility [Member] | Blackstone [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Senior secured credit facility | $ 518,000 | $ 518,000 | ||||
Total interest payments | $ 2,000 | $ 3,000 | ||||
Contributed for loan asset securitization | 518,000 | |||||
Investment in asset securitization subordinate risk interest amount | $ 99,000 | |||||
Blackstone [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Equity method investment ownership percentage | 30.00% | 30.00% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | May 30, 2018Renewal_Options | Jul. 07, 2014USD ($) | Jun. 30, 2019USD ($)Renewal_Options | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)Renewal_Options | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Commitments And Contingencies [Line Items] | |||||||
Management fee | $ 10,000,000 | $ 4,000,000 | $ 21,000,000 | $ 4,000,000 | |||
Royalty fee expense | 11,000,000 | 5,000,000 | 21,000,000 | 5,000,000 | |||
Lenders escrow | 27,000,000 | 27,000,000 | $ 20,000,000 | ||||
Purchase commitments | 35,000,000 | $ 35,000,000 | |||||
Lease term description | Including the renewal options, these leases extend for varying periods through 2096. | ||||||
Undiscounted contractual payments | 83,000,000 | $ 83,000,000 | |||||
Lease liabilities | 28,000,000 | 28,000,000 | |||||
Rent expense | 1,000,000 | 1,000,000 | 2,000,000 | 2,000,000 | |||
Variable rents | 300,000 | $ 300,000 | 400,000 | $ 400,000 | |||
Short-term lease expense | 100,000 | 200,000 | |||||
Accounts Payable and Accrued Liabilities [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Undiscounted contractual payments | 83,000,000 | 83,000,000 | |||||
Lease liabilities | 28,000,000 | $ 28,000,000 | |||||
Internal Revenue Service (IRS) [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Tax rate impose on REIT, federal and state tax authorities | 100.00% | ||||||
Notice of taxable adjustment from IRS | $ 158,000,000 | ||||||
Percentage of excise tax would be imposed on real estate investment trust equal to excess rent | 100.00% | ||||||
Internal Revenue Service (IRS) [Member] | Wyndham [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Reserve | $ 240,000,000 | $ 240,000,000 | |||||
Minimum [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Initial base terms for the leases | 25 years | 25 years | |||||
La Quinta Management L.L.C [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Management and royalty fees as percentage of total gross revenues | 5.00% | ||||||
Management agreement date | May 30, 2018 | ||||||
Management agreement term for managing hotel | 20 years | ||||||
Number of hotel management agreement renewal options | Renewal_Options | 2 | ||||||
Hotel management agreements, renewal period | 5 years | ||||||
La Quinta Franchising LLC [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Percentage of royalty fee on gross room revenue | 5.00% | ||||||
Term of the franchise agreements end year | 2038 | ||||||
Number of franchise renewal options available | Renewal_Options | 1 | 1 | |||||
Franchise agreements renewal period | 10 years | ||||||
Percentage of reservation fee based on hotels gross room revenues | 2.00% | ||||||
Percentage of marketing fee based on hotels gross room revenues | 2.50% | ||||||
Percentage of loyalty program fee based on hotels room night revenues and other miscellaneous ancillary fees | 5.00% | ||||||
Percentage of facility potentially eligible for such capital expenditure | 65.00% | ||||||
Lenders escrow | $ 15,000,000 | $ 15,000,000 | |||||
La Quinta Franchising LLC [Member] | Minimum [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Minimum range of capital expenditure needs to be incurred per Hotel room | $ 1,500 | ||||||
Period to meet brand standards set forth by franchisor by incurring certain capital expenditures per hotel room | 2 years | ||||||
Time period within capital expenditure requirements needs to be complied | 2 years | ||||||
La Quinta Franchising LLC [Member] | Maximum [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Minimum range of capital expenditure needs to be incurred per Hotel room | $ 7,500 | ||||||
Period to meet brand standards set forth by franchisor by incurring certain capital expenditures per hotel room | 11 years | ||||||
Time period within capital expenditure requirements needs to be complied | 9 years |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Contractual Maturity of All Operating Lease Liabilities on Undiscounted Basis (Detail) $ in Millions | Jun. 30, 2019USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
July through December 2019 | $ 2 |
2020 | 4 |
2021 | 4 |
2022 | 3 |
2023 | 3 |
2024 | 3 |
Thereafter | 64 |
Lessee, operating lease, liability payments due | $ 83 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Future Minimum Non-cancellable Payment for Operating Lease (Details) $ in Millions | Dec. 31, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2019 | $ 3 |
2020 | 3 |
2021 | 3 |
2022 | 2 |
2023 | 2 |
Thereafter | 98 |
Operating leases future minimum payments due | $ 111 |
Supplemental Disclosures of C_3
Supplemental Disclosures of Cash Flow Information - Summary of Supplemental Cash Flow Information (Detail) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Supplemental cash flow information: | |||
Interest paid during the period | $ 28 | $ 54 | |
Income taxes paid during the period, net of refunds | 1 | 1 | |
Supplemental non-cash disclosure: | |||
Capital expenditures included in accounts payable | 6 | 5 | |
Construction in progress transferred to gross operating real estate | 9 | ||
Cash flow hedge adjustment, net of tax | 1 | ||
Casualty receivable related to real estate | $ 3 | ||
Dividends payable on common stock | 11 | $ 12 | |
Recognition of right of use operating lease assets and operating lease liabilities | 28 | ||
Financing of property insurance prepaids | 14 | ||
Escrowed casualty insurance proceeds | $ 4 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ / shares in Units, $ in Millions | Aug. 13, 2019USD ($)$ / shares | May 14, 2019$ / shares | Aug. 13, 2019USD ($)Hotel$ / shares | Jun. 30, 2019USD ($)Hotel | Jun. 30, 2018Hotel | Jun. 30, 2019USD ($)Hotel | Jun. 30, 2018USD ($)Hotel |
Subsequent Event [Line Items] | |||||||
Cash dividends declared, per share | $ / shares | $ 0.20 | ||||||
Dividends payable, declared date | May 14, 2019 | ||||||
Dividends declared, payable date | Jul. 15, 2019 | ||||||
Dividends payable, date of record | Jun. 28, 2019 | ||||||
Number of hotels classified as investment in real estate sold | Hotel | 3 | 0 | 5 | 1 | |||
Gross proceeds from sales of hotels | $ 16 | $ 21 | $ 5 | ||||
Gain (loss) on sales of hotels | $ 2 | $ 2 | $ 0.5 | ||||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Cash dividends declared, per share | $ / shares | $ 0.20 | $ 0.20 | |||||
Dividends payable, declared date | Aug. 13, 2019 | ||||||
Dividends declared, payable date | Oct. 15, 2019 | ||||||
Dividends payable, date of record | Sep. 30, 2019 | ||||||
Number of hotels classified as investment in real estate sold | Hotel | 7 | ||||||
Gross proceeds from sales of hotels | $ 29 | ||||||
Gain (loss) on sales of hotels | 5 | ||||||
Subsequent Event [Member] | CMBS Facility [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Principal repayment of debt | $ 10 | $ 10 |