Page 15 - Apple REIT 9 2008 Annual Report

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Dimension, McKibbon, Gateway, LBA, Western or Vista is not affiliated with either Marriott or Hilton, and as a result, the hotels
they manage were required to obtain separate franchise agreements with each respective franchisor. The Hilton franchise agreements
generally provide for a term of 10 to 20 years. Fees associated with the agreements generally include the payment of royalty fees
and program fees. The Marriott franchise agreements generally provide for initial terms of 13 to 20 years. Fees associated with the
agreements generally include the payment of royalty fees, marketing fees, reservation fees and a communications support fee based on
room revenues. For the year ended December 31, 2008 the Company incurred approximately $468,000 in franchise fees.
Maintenance
The hotels have an ongoing need for renovation and refurbishment. Under various hotel management agreements, the Company
has agreed to fund expenditures for periodic repairs, replacement or refurbishment of furniture, fixtures and equipment for the hotels
in an amount equal to a certain percentage of gross revenues. In addition, other capital improvement projects may be directly funded
by the Company.
Employees
During 2008, all employees involved in the day-to-day operation of the Company’s hotels were employed by third party
management companies engaged pursuant to the hotel management agreements. The Company utilizes, through an advisory
agreement for corporate and strategic support, personnel from A9A which in turn utilizes employees from Apple REIT Six, Inc.
Environmental Matters
In connection with each of the Company’s hotel acquisitions, the Company obtains a Phase I Environmental Report and additional
environmental reports and surveys, as are necessitated by the preliminary report. Based on the reports, the Company is not aware
of any environmental situations requiring remediation at the Company’s properties, which have not been, or are not currently being
remediated as necessary. No material remediation costs have or are expected to occur.
Property Acquisitions
The Company acquired a total of 21 hotels during 2008, with its first hotel acquired in July 2008. The following table summarizes
the location, brand, manager, gross purchase price, number of hotel rooms and date of purchase by the Company for each hotel
acquired. All dollar amounts are in thousands.