Summit Hotel Properties, Inc.INN

Summit Hotel Properties, Inc. Commitments Disclosure

10-KFiled Feb 25, 20262 min read
COMMITMENTS AND CONTINGENCIES
 
Franchise Agreements
 
All of our lodging properties (with the exception of the Onera Property and the Nordic Lodge - Steamboat Springs, CO) operate under franchise agreements with major hotel franchisors. The terms of our franchise agreements generally range from 10 to 30 years with various extension provisions. Each franchisor receives franchise fees ranging from 3% to 6% of each hotel property’s room revenues, and some agreements require that we pay marketing fees of up to 4.3% of room revenue. In addition, some of these franchise agreements require that we deposit into a reserve fund for capital expenditures up to 5% of the lodging property's gross or room revenues, depending on the franchisor, to ensure that we comply with the franchisor's standards and requirements. We also pay fees to our franchisors for services related to reservation and information systems. In 2025, 2024, and 2023, we expensed fees related to our franchise agreements of $56.3 million, $53.8 million, and $52.6 million, respectively.
 
Management Agreements
 
Our lodging properties operate pursuant to management agreements with various professional third-party management companies. The remaining terms of our management agreements range from month-to-month to eight years and have various extension provisions. Each management company receives a base management fee, generally a percentage of total lodging property revenues. In addition, our lodging property management agreements generally provide that the lodging property manager can earn an incentive fee for hotel-level EBITDA over certain thresholds of a required investment return. In some cases, there are also monthly fees for certain services, such as accounting and shared services, based on the number of guestrooms. During the years ended December 31, 2025, 2024, and 2023, we expensed fees related to our lodging property management agreements of $15.8 million, $15.9 million, and $18.5 million, respectively. During the year ended December 31, 2025, we recorded a termination fee related to property management transition activities of approximately $0.9 million that is included in Other (expense) income, net on our Consolidated Statement of Operations.
 
Litigation
 
We are involved from time to time in litigation arising in the ordinary course of business. We are not currently aware of any actions against us that would have a material effect on our consolidated financial position or results of operations.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 24, 2025
2023Feb 29, 2024
2022Feb 27, 2023
2021Feb 23, 2022
2020Feb 26, 2021
2019Feb 25, 2020
2018Feb 26, 2019
2017Feb 21, 2018
2016Feb 23, 2017
2015Feb 24, 2016

About Commitments Disclosures

Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.

Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.

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