Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2011

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Note 13.  Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at June 30, 2011, categorized by the level of inputs used in the valuation of each asset.

			Fair Value at Reporting Date Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other  Observable Inputs (Level 2)		Significant  Unobservable  Inputs (Level 3)
Properties held for sale (1)	$	178,106	$	—	$	46,745	$	131,361
Long lived assets held and used (2)	7,650		—		—		7,650
Investment securities (3)	13,843		13,843		—		—

(1)Our properties held for sale are reported at estimated fair value less costs to sell and consist of 25 hotel properties we were marketing for sale at June 30, 2011.  We estimated the fair value of our four InterContinental hotels held for sale using offers to purchase the properties made by third parties (Level 2 inputs).  We decreased the carrying values of these hotels during the three months ended June 30, 2011, and recorded a $315 loss on asset impairment.  In July 2011, we completed the sale of one of these hotels.  In connection with our decision to sell 21 Marriott hotels as described in Note 12, we classified the hotels as held for sale and recorded a $3,081, or $0.02 per share, loss on asset impairment in the second quarter of 2011 to reduce the carrying value of 14 of these hotels to their estimated fair value less costs to sell.  We estimated the fair value of these hotels using standard industry valuation techniques and estimates of value developed by hotel brokerage firms (Level 3 inputs).

(2)In performing our periodic evaluation of real estate assets for impairment during the second quarter of 2011, we revised our value assumptions regarding one InterContinental hotel that we are considering selling as part of our July 2011 agreement with InterContinental.  As a result, we recorded a $3,867, or $0.03 per share, loss on asset impairment during the second quarter of 2011 to reduce the carrying value of this hotel to its estimated fair value.  We estimated the fair value of this hotel using standard industry valuation techniques and estimates of value developed by hotel brokerage firms (Level 3 inputs).

(3)Our investment securities are reported at fair value which is based on quoted market prices (Level 1 inputs).

In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, revolving credit facility, senior notes and mortgage notes payable and security deposits. At June 30, 2011 and December 31, 2010, the fair values of these additional financial instruments were not materially different from their carrying values, except as follows:

	June 30, 2011					December 31, 2010
	Carrying  Amount			Fair  Value		Carrying  Amount			Fair Value
Mortgage Note, due 2011 at 8.3%	$	—		$	—	$	3,383		$	3,408
Senior Notes, due 2012 at 6.85%	100,829			108,697		100,829			109,897
Senior Notes, due 2013 at 6.75%	287,000			313,793		287,000			315,364
Senior Notes, due 2014 at 7.875%	300,000			352,602		300,000			349,974
Senior Notes, due 2015 at 5.125%	280,000			303,769		280,000			296,782
Senior Notes, due 2016 at 6.3%	275,000			306,393		275,000			297,795
Senior Notes, due 2017 at 5.625%	300,000			328,224		300,000			316,846
Senior Notes, due 2018 at 6.7%	350,000			406,247		350,000			392,303
Convertible Senior Notes, due 2027 at 3.8%	79,054			81,170		79,054			81,579
Unamortized discounts	(6,616		)	—		(8,043		)	—
Total financial liabilities	$	1,965,267		$	2,200,895	$	1,967,223		$	2,163,948

We estimate the fair value of our indebtedness using discounted cash flow analysis and currently prevailing market interest rates.