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klee12 writes
<<It is my understanding that Hotel REITs like MHX and HPT own land and building, but someone else operates the hotel. If there is a downturn in the economy and hotels do not make money, it would seem that the operating companies take a hit, and the REITs get hurt if the operating companies cannot fulfill their contractural obligations. Am I right?>>

Most hotel REITs have entered into percentage leases with their operators. This means that the performance of the hotels do very much matter to the REITs, as their lease payments are a percentage of revenues. HPT is unusual in that its leases are mainly fixed, rather than percentage, so you would be correct in this one instance. HPT is the only hotel REIT I am aware of that uses triple net leases rather than percentage leases.
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