Back to GetFilings.com

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

Boykin Lodging Company

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

      Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No 

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

      The aggregate market value of the voting stock held by non-affiliates of the registrant, as of March 16, 2001, was approximately $196 million.

      As of March 16, 2001, the registrant had 17,163,735 common shares issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 31, 2001 into Part III, Items 10, 11, 12, and 13.

Table of Contents

FORWARD LOOKING STATEMENTS

      This Form 10-K contains statements that constitute forward-looking statements. Those statements appear in a number of places in this Form 10-K and the documents incorporated by reference herein and include statements regarding our intent, belief or current expectations or that of our directors or officers with respect to:

	•	Leasing, management or performance of the hotels;
	•	Adequacy of reserves for renovation and refurbishment;
	•	Potential acquisitions and dispositions by Boykin;
	•	Boykin’s financing plans;
	•	Boykin’s policies regarding investments, acquisitions, dispositions, financings, conflicts of interest and other matters; and
	•	Trends affecting Boykin’s or any hotel’s financial condition or results of operations.

      You are cautioned that any such forward-looking statement is not a guarantee of future performance and involves risks and uncertainties, and that actual results may differ materially from those in the forward-looking statement as a result of various factors. The factors that could cause actual results to differ materially from our expectations include, among other factors, financial performance, real estate conditions, execution of hotel acquisition or disposition programs, changes in local or national economic conditions, changes in interest rates, changes in local or national supply and construction of new hotels, impact of changes in local or national economic conditions on the occupancy of our hotels, changes in profitability and margins and the financial condition of our lessees, and other similar variables. The information contained in this Form 10-K and in the documents incorporated by reference herein and Boykin’s periodic filings with the Securities and Exchange Commission also identifies important factors that could cause such differences.

      With respect to any such forward-looking statement that includes a statement of its underlying assumptions or bases, we caution that, while we believe such assumptions or bases to be reasonable and have formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, we or our management express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished.

PART I

(a)  General Development of Business

  About Boykin Lodging Company and Our Strategies

      Boykin Lodging Company, an Ohio corporation, is a real estate investment trust (“REIT”) that, as of March 16, 2001, owns interests in 32 hotels throughout the United States and leases its properties to established hotel operators. Our primary business strategies are:

	•	maximizing revenue growth in our hotels through —

	•	strong management performance from our lessee/operators;
	•	selective renovation;
	•	expansion and development; and
	•	improved brand repositioning;

	•	acquiring upscale, full-service commercial and resort hotels that will increase our cash flow and are purchased at a discount to their replacement cost, and;
	•	developing strategic alliances and relationships with a network of high-quality hotel operators and franchisors of the hotel industry’s premier upscale brands.

1

Table of Contents

      Our management has substantial hotel operating, development, acquisition and transactional experience. Our executives have over 100 years combined of experience in the hotel industry and have directly overseen the acquisition, disposition, recapitalization, development and repositioning of billions of dollars of hotel assets throughout the United States.

  Formation and Initial Public Offering

      Boykin Lodging Company was formed to continue and expand the 41-year history of hotel ownership, acquisition, redevelopment and repositioning activities of its predecessors, Boykin Management Company and its affiliates (the “Boykin Group”). We completed our initial public offering (“IPO”) in November 1996 and, through Boykin Hotel Properties, L.P., an Ohio limited partnership (the “Partnership”), we acquired nine hotel properties in which the Boykin Group held significant ownership interests, seven of which the Boykin Group has owned and managed since their opening. Boykin Lodging Company currently has a 92.1% ownership interest in and is the sole general partner of the Partnership.

  Major Events Since the IPO

	•	Since the IPO, consistent with our strategies, we have acquired 25 hotels (including the ten-hotel portfolio discussed below) containing 7,231 guest rooms and disposed of one hotel containing 403 guest rooms, bringing the total number of hotels we have an ownership interest in to 33 hotels at December 31, 2000, with a total of 9,236 guest rooms.
	•	In 1998, we completed a follow-on public equity offering of 4.5 million common shares, netting proceeds of approximately $106.3 million.
	•	In 1998, we completed a merger with Red Lion Inns Limited Partnership, in which we acquired a portfolio of ten Doubletree-licensed hotels. In the transaction, we issued 3.1 million common shares and paid approximately $35.3 million in cash to the Red Lion partners. The total consideration value, including assumed liabilities of approximately $155.7 million and common shares issued valued at $80.3 million, was $271.3 million.
	•	In 1999, we formed a joint venture with AEW Partners III, L.P. (“AEW”). The Boykin/AEW venture partnered with a private investor, forming Boykin Chicago, LLC (“Boykin Chicago”), in which Boykin/AEW has a 75% interest. Boykin Chicago purchased the 421-room Executive Plaza Hotel located in Chicago, Illinois. In September 2000, we purchased the 25% ownership interest in Boykin Chicago from the private investor for $6.3 million, thereby increasing our total ownership percentage in the hotel from 18.75% to 43.75%.
	•	In September 2000, we transferred ownership of our Cleveland Marriott East to Hilton Hotels Corporation (“Hilton”). In exchange, we obtained from Hilton a 239-suite Doubletree Guest Suites hotel in Southfield, Michigan and a 290-room Doubletree hotel in San Antonio, Texas. The transaction was accounted for as a like-kind exchange of similar assets with the net book value of the Beachwood hotel being carried forward and allocated as the cost basis of the Southfield and San Antonio hotels with no gain or loss recognized.
	•	At December 31, 2000, we had $311.4 million of consolidated debt outstanding consisting of:

	•	$29.5 million outstanding under our $100 million secured credit facility;
	•	a $45 million term loan secured by three properties;
	•	$128.9 outstanding under a $130 million term loan; and
	•	a $108 million term loan secured by nine properties.

	•	In January 2001, we sold our Daytona Beach Radisson resort for consideration of $12.5 million

(b)  Financial Information About Industry Segments

      All of Boykin’s operations are in the hotel industry.

2

Table of Contents

(c)  Narrative Description of Business

      Our primary business objectives are to maximize current returns to our shareholders by increasing cash flow available for distribution and long-term total returns to shareholders through appreciation in value of our common shares. We seek to achieve these objectives through participation in increased revenues from our hotels pursuant to lease agreements with tenants that provide us with the greater of a base rental income or a percentage of revenues from hotel operations. We also seek to achieve these objectives by selective acquisition, ownership, redevelopment, repositioning and expansion of additional hotel properties as well as timely disposition of non-strategic assets. We will seek to continue to invest in properties whose performance we can improve with our established industry and marketing expertise.

  Boykin’s Hotel Portfolio

      Our hotel portfolio, as of March 16, 2001, includes 30 full-service hotels and two limited-service hotels, all of which compete in the upscale to moderate price segment of the hospitality market. For the year ended December 31, 2000, our hotels, on a same unit basis, had an average occupancy rate of 67.5%, an average daily rate (“ADR”) of $94.29 and revenue per available room (“REVPAR”) of $63.61. Refer to Item 2(a) “Hotel Properties” on page 10 for a listing of our hotels. Also refer to Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 18 for a chart of hotel operating data for 2000 and 1999.

  How Boykin Applies Its Business Strategies

  A.  Internal Growth from Strong Management, Renovation, and Development and Repositioning

      1.  Strong Management Performance

      We believe that the revenue and cash flow from our hotels will be maximized by intensive management and marketing. We intend to derive increased cash flow through the application of our lessees’ operating strategies, which include active hotel revenue maximization (also referred to as effective yield management). We believe that our lessees’ commitment to customer service and the experience of their management teams positions us to capitalize on the expected continuing demand in our markets.

      We also believe that, based on our historical operating results, the location of our hotels, and the strength of our own and our lessees’ management teams, the portfolio should provide us with the opportunity for cash flow growth through the percentage leases.

      2.  Capital Expenditure and Renovation Strategy

      We believe that our regular program of capital improvements at our hotels, including replacement and refurbishment of furniture, fixtures, and equipment, helps maintain and enhance their competitiveness and maximizes revenue growth under the percentage leases. Consistent with this strategy, we have made significant renovations at several of our hotels since our IPO. In 2000, 1999, and 1998 we spent $18.4 million, $22.1 million, and $32.5 million, respectively on renovations. This represented 6 percent, 7 percent, and 14 percent of 2000, 1999, and 1998 hotel revenues, respectively, significantly above the hotel industry standard of 4 percent.

      3.  Development, Expansion and Repositioning Strategy

      We may develop additional full-service or upscale limited-service hotels on land that we acquire in our current geographic markets or on land contiguous to our hotels. We believe that selective development of hotels in our existing geographic markets could enable us to take advantage of operating efficiencies to generate attractive returns on our investment. We may also expand our existing hotels and/or reposition under-performing hotels by changing the franchise brand affiliation.

      Since our IPO, we have reflagged/repositioned three hotels and expect to reposition our newly-acquired Southfield Doubletree Suites as an Embassy Suites after an approximate $5.5 million renovation in 2001. In the fall of 2001, we also expect to commence an approximate $12 million renovation of the Executive Plaza Hotel in Chicago, Illinois, which would reposition this property to the quality of a four-star hotel. We are currently

3

Table of Contents

      Over the past two years, we have perfected zoning rights to expand our Pink Shell Beach Resort by 33 rooms. If we proceed with the project, our plan is to demolish 59 cottage units, or about 28% of the rooms at the resort. We would then construct a 92-unit tower that would significantly upgrade the character of the resort. The plan is for the units in the new tower to be sold as condominiums, with the expectation that the owners would put their unused room nights back to the resort by contract. As with any renovation, the shorter-term effects may be a lower REVPAR and revenues, due to the demolition of the cottage units. We plan to make the decision to proceed with this project when we have pre-sold a significant portion of condominiums and, although we are very encouraged by the preliminary interest we have seen, we don’t expect to know that until late second quarter/early third quarter of 2001.

  B.  Acquisitions

      We believe that the upscale and moderate market segments of the hospitality industry will present attractive acquisition opportunities. Our acquisition strategy focuses on the following categories:

	1.  Product Type — Full-service commercial hotels, airport hotels, major tourist hotels and destination resorts in major markets and business centers.
	2.  Market Repositioning Opportunities — Undervalued hotels whose occupancy, daily rates and overall revenues can be significantly enhanced through new brand affiliations and/or implementation of new marketing strategies which will maximize revenues and profitability.
	3.  Redevelopment and Renovation Opportunities — Hotels with sound operational fundamentals that, because of a lack of capital, require physical renovation to achieve their full performance potential, and other properties which can benefit from total redevelopment and market repositioning.
	4.  Portfolio Acquisitions — Portfolios of hotels which result in geographic economies of scale or which may be leased back to proven hotel operators as additional lessees, and that may benefit from our repositioning and redevelopment experience and access to capital.

      We intend to maintain a geographically diversified hotel portfolio and may also cluster hotels within certain primary markets in order to take advantage of operational and managerial economies of scale. We will acquire or develop additional hotel properties only as suitable opportunities arise, and will not undertake acquisition or development of properties unless adequate sources of capital and financing are available. Funds for future acquisitions or development of hotels are expected to be derived, in whole or in part, from capital obtained from borrowings under our credit facility or other borrowings, from the proceeds of the sale of non-strategic hotels, from additional issuances of common shares or other securities and from cash flows from operations.

  C.  Strategic Alliances and Relationships

      Our strategic alliances and relationships fall into two primary areas:

	•	Franchise Brand Strategy
	•	Operator and Joint Venture Strategy

      1.  Franchise Brand Strategy

      We focus on owning hotel properties that are, or can be, associated with brands that will lead the hospitality industry in REVPAR, such as Marriott®, Radisson®, Hilton®, Doubletree®, Holiday Inn®, Hampton Inns®, Quality Suites®, Hyatt®, Renaissance®, Omni®, and Embassy Suites®. We believe that we can maximize our market share and revenue by taking advantage of our orientation toward sales and marketing to identify the most effective branding and to leverage our brands with effective direct sales strategies.

      We expect to continue to affiliate with a number of different franchisors in order to maximize the performance of our hotels by providing greater access to a broad base of national marketing and reservation

4

Table of Contents

      2.  Operator and Joint Venture Strategy

      We lease our properties to established hotel operators pursuant to percentage lease agreements, which provide us with the greater of a base rental income or a percentage of revenues from operations.

      In selecting operators, we seek hotel managers with demonstrated full-service hotel expertise, a stable operating and financial performance history, an excellent reputation in the hospitality industry, an ability to introduce additional acquisition opportunities to us, and to lease additional hotels from us.

      The hotels in our portfolio are currently leased to and operated by the following entities:

*	One hotel is currently operated by us pursuant to a management agreement with a subsidiary of BMC. BMC leased 16 hotels from us at December 31, 2000. One hotel was sold on January 12, 2001.

  BMC, Westboy and ChiBoy

      Robert W. Boykin (our Chairman of the Board and Chief Executive Officer) and his brother, John E. Boykin, control BMC. Westboy and ChiBoy are wholly-owned subsidiaries of BMC that lease the ten Doubletree hotels and the Chicago Executive Plaza Hotel, respectively. BMC has continued the 41-year hotel operation and management business of the Boykin Group. The Boykin Group has capabilities in all phases of development and management of hotel properties. BMC currently manages 19 properties containing 4,851 guest rooms located throughout the United States, including 16 hotels leased from us, and one hotel operated by us.

      BMC’s subsidiaries, which conduct management activities for owners other than us, include an award-winning hotel interior design business and a hotel and restaurant food, beverage, supply and equipment purchasing business. These operations are conducted, in part, with a view to introducing us to acquisition opportunities.

      BMC and its owners, who have a substantial interest in the Partnership, have interests that conflict with our interests in connection with the structuring and enforcement of the percentage lease agreements and other agreements between us and BMC and in connection with activities that may maximize profits for BMC without necessarily benefiting us. We have implemented several measures, including those listed below, to align the interests of BMC and its owners with our interests and to address these conflicts of interest:

	•	BMC’s owners have retained their equity interests in the Partnership;
	•	Distributions from BMC and net proceeds of any sale of BMC (with certain limited exceptions) will be used to purchase units in the Partnership or our common shares, and half of BMC’s consolidated earnings will be retained in BMC and its subsidiaries to maintain their consolidated net worth at not less than 25% of the aggregate annual rent payments under BMC’s percentage lease agreements;

5

Table of Contents

	•	Our corporate charter documents require that our independent directors shall make all determinations to be made on behalf of Boykin Lodging Company with respect to the relationships or opportunities that represent a conflict of interest for any officer or director of Boykin Lodging Company as such;
	•	Any affiliate of the Boykin Group will conduct all hotel acquisition, development and ownership activities only through Boykin Lodging Company; and
	•	Any change in control of BMC without our consent will constitute a default under BMC’s percentage lease agreements.

      BMC also has developed a deferred compensation plan for its corporate-level senior executives, under which the value of each award is based on the value of our common shares.

  Third Party Operator

      Hilton Hotel Corporation manages our portfolio of ten Doubletree hotels and has a long history of owning and operating upscale hotels.

  Third Party Lessees

      We have implemented a strategy of structuring joint ventures with our third party lessee/operators to align the hotel lessees’ economic interests with our economic interests. In each joint venture, the lessee’s ability to receive cash flow and equity capital distributions is subordinated to our receipt of specified minimum distributions. In addition, each lessee must maintain a specified net worth to support its lease payment obligations and pledge its joint venture interest as security for the lease payment obligations. We are permitted to subject any majority-owned joint venture’s hotel to a mortgage or to sell the hotel or its interest in the joint venture without obtaining the affected joint venture partner’s consent.

      We currently have joint ventures formed with the following companies or their affiliates who operate, lease and share in the ownership of the following hotels:

      MeriStar. MeriStar is a publicly traded hotel management company that manages hotels throughout the United States. MeriStar’s portfolio of full-service hotels under management includes both independent brands and a number of well-known franchised brands, including Hilton®, Sheraton®, Marriott®, Embassy Suites®, Westin® and Doubletree®. MeriStar also leases and operates our Pink Shell Beach Resort, which is owned 100% by the Partnership.

      Davidson. Davidson is a privately held national hotel management company located in Memphis, Tennessee. Davidson provides management, development, consulting and accounting expertise for the hospitality industry. Davidson operates hotels under franchise agreements with such franchisors as Marriott®, Embassy Suites®, Hilton®, Crowne Plaza®, Omni® and Holiday Inn®.

      Outrigger. Outrigger is a privately held hotel management company based in Encino, California. Outrigger has operated or currently operates a full range of hotel products, including Marriott®, Sheraton®, Hilton®, Residence Inn®, Holiday Inn®, Radisson®, and many limited service products. In addition to branded hotels, Outrigger operates upscale, boutique hotels.

6

Table of Contents

  Terms of the Percentage Lease Agreements

      The following summary of the material terms of the percentage leases is qualified in its entirety by reference to the form of Percentage Lease, which was filed as an exhibit to our Registration Statement on Form S-11 (Registration Statement No. 333-6341, filed on June 19, 1996, as amended).

      The percentage lease agreements have the material terms described below:

	•	Duration. Non-cancelable remaining terms ranging from less than one year to eight years, subject to earlier termination on the occurrence of certain contingencies described in the percentage leases. The majority of the percentage leases do not contain renewal terms and those with renewal options are subject to agreement between the parties regarding market terms.
	•	Amounts Payable Under the Percentage Leases. Lessees are obligated to pay to Boykin:

	(i)  the higher of minimum rent or percentage rent, except for the French Lick Springs Resort, for which both minimum rent and percentage rent are required to be paid.

	—	Minimum rent is a fixed amount determined by negotiation between us and the applicable lessee and is payable monthly.
	—	Percentage rent is calculated by multiplying fixed percentages by gross room and other revenue and gross food and beverage revenue, over specified threshold amounts. Percentage rent is payable quarterly.

	Both the threshold gross room and other revenue amounts used in computing percentage rent and minimum rent are adjusted annually for changes in the United States Consumer Price Index.
	(ii)  certain other amounts, including interest accrued on any late payment or charge.
	Each lease also requires the lessee to pay all costs and expenses incurred in the operation of the hotel. The lessee is required to maintain the hotel in good order and repair and to make necessary nonstructural repairs. We fund capital expenditures as we consider necessary and as required by our franchisors.

	•	Insurance and Property Taxes. We pay, or cause the lessee to pay, real estate and personal property taxes and maintain, or cause the lessee to maintain, property insurance, including casualty insurance, on our hotels. The lessee maintains comprehensive general public liability, workers’ compensation, 12-month rental interruption and any other insurance customary for properties similar to the hotel or required by any relevant franchisor and must have us named as an additional insured. We believe that the insurance coverage carried by each hotel is adequate in scope and amount.
	•	Indemnification. The lessee indemnifies us against all liabilities, costs and expenses incurred by, imposed on or asserted against us, on account of, among other things:

	—	accidents or injury to persons or property on or about the hotel;
	—	negligence by the lessee or any of its agents;
	—	certain environmental liabilities resulting from conditions existing at the time of the lease execution;
	—	taxes and assessments in respect of the hotel (other than our real estate taxes and income taxes on income attributable to the hotel);
	—	the sale or consumption of alcoholic beverages on the hotel property; and
	—	any breach of the lease by the lessee.

	•	Assignment and Subleasing. The lessee is not permitted to sublet all or any part of the hotel, assign its interest, or enter a management agreement with a third party to operate the hotel without our prior written consent.
	•	Events of Default. Events of default include, among other things:

	—	the failure by the lessee to pay minimum and percentage rent when due;
	—	failure to observe or perform any other term of the lease;

7

Table of Contents

	—	termination of the franchise agreement covering any hotel leased to the lessee; and
	—	with respect to BMC, any failure to comply with BMC’s covenants, as described on page 5. “BMC, Westboy and ChiBoy.”

      In the event of default under any lease with BMC, we may terminate the lease and any or all of the other percentage leases with BMC, and BMC will be required to surrender possession of the affected hotels. If an event of default under any lease with any other lessee occurs, we may terminate the lease and the lessee will be required to surrender possession of the affected hotel.

  Recent REIT Legislation

      Congress recently enacted legislation which will dramatically change the tax rules applicable to hotel REITs. Effective in 2001, REITs will be able to operate certain businesses through a taxable REIT subsidiary (“TRS”), which, in the past, would have jeopardized their tax-free status. For hotel REITs, this means that starting in 2001, our hotel properties can be leased to a TRS we own, as long as the TRS hires an independent hotel operator to manage the properties.

      Our Board of Directors has appointed a special committee to evaluate how a TRS could benefit our shareholders. We believe that we will be in a position to announce specific plans later in 2001.

  Franchise Agreements

      Our hotels are operated under franchise license agreements with premier nationally recognized hotel chains, including:

  •  DoubleTree®
  •  Marriott®
  •  Radisson®
  •  Hilton®
  •  Holiday Inn®
  •  Quality Suites®
  •  Hampton Inns®

      Our French Lick Springs Resort in French Lick, Indiana operates as an independent hotel.

      We expect that most of the additional hotel properties that we acquire will be operated under franchise agreements. We believe that the public’s perception of quality associated with a franchisor can be an important feature in the operation of a hotel. Franchisors provide a variety of benefits for franchisees, including national advertising, publicity and other marketing programs designed to increase brand awareness, training of personnel, continuous review of quality standards and centralized reservation systems.

      The expiration dates for the hotels’ franchise agreements range from August 31, 2001 to September 18, 2020, which, in some cases, may be extended for additional terms. The franchise agreements generally impose certain management, operational, record-keeping, accounting, reporting and marketing standards and procedures with which the franchised operator must comply. Some of the key provisions of the franchise agreements include the following:

	•	Each franchise agreement gives the lessee/operator the right to operate the franchised hotel under a franchise for a period of years specified in that agreement. The franchise agreements provide for early termination at the franchisor’s option on the occurrence of certain events of default, such as the failure to properly maintain the hotel.
	•	The lessees/operators are responsible to pay franchise fees ranging from 2.25% to 6% of gross room sales and advertising or marketing and reservation fees generally ranging from 0.4% to 4% of gross room sales.
	•	Notification must be given to the franchisor upon the sale of a hotel giving the franchisor rights, as defined in its franchise agreement, ranging from consent to the transfer of ownership, the franchisor’s ability to match an offer for sale, or the right to terminate the franchise agreement. Several of the franchise agreements can be terminated upon sale by the franchisee.

8

Table of Contents

  Employees

      We currently have eighteen employees. These employees perform, directly or through the Partnership, various acquisition, development, redevelopment and corporate management functions.

  Inventory

      Working capital assets required in the operation of our hotels are generally provided by the lessees at their expense.

  Environmental Matters

      Under various federal, state and local laws, ordinances, and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances or petroleum on, under or in the property. This liability may be imposed without regard to whether the owner or operator knew of, or was responsible for, the presence of the substances. Other federal, state and local laws, ordinances and regulations and the common law impose on owners and operators certain requirements regarding conditions and activities that may affect human health or the environment. Failure to comply with applicable requirements could result in difficulty in the lease or sale of any affected property or the imposition of monetary penalties, in addition to the costs required to achieve compliance and potential liability to third parties. We may be potentially liable for such costs or claims in connection with the ownership and operation of the current hotels and hotels we may acquire in the future.

      We have not been notified by any governmental authority, nor are we otherwise aware, of any material noncompliance, liability or claim relating to hazardous or toxic substances or to other environmental matters in connection with any of our hotels. Nonetheless, it is possible that material environmental contamination or conditions exist, or could arise in the future, in the hotels or on the land upon which they are located which could create a material environmental liability. Further, there can be no assurance that the hotels that we may acquire will not give rise to any material environmental liability.

  Competition

      The principal methods of competition for each of our hotels are (i) brand affiliation, (ii) room rates, (iii) customer service, (iv) location, and (v) the condition and upkeep of each hotel in general and in relation to other hotels in its local market. We believe that we are well positioned in each category. We have affiliated with a network of high quality franchisors. We believe that our lessees emphasis on customer service and their strong and active “yield management” enables us to maximize revenues at each hotel. While new hotels in certain of our markets have caused us to experience lower than expected lease revenues from some of our hotels, our hotels are generally located in areas that generate demand such as airport hotels, major tourist locations, and major cities or business centers. We also believe our strong commitment to regular capital improvements, including the replacement and refurbishment of furniture, fixtures and equipment, helps improve our competitive position.

      Each of our hotels is located in a developed area that includes other hotel properties. The occupancy, ADR and REVPAR of any hotel or any hotel property acquired in the future could be materially and adversely affected by the number of competitive hotel properties in its market area. Competition for potential acquisitions may generally reduce the number of suitable investment opportunities offered to us and increase the bargaining power of property owners seeking to sell.

  Seasonality

      The operations at our hotels historically have been seasonal. Twenty-eight of the hotels maintain higher occupancy rates during the second and third quarters. Our four hotels in Florida experience their highest occupancy in the first quarter. This seasonality pattern can be expected to cause fluctuations in our quarterly lease payments received under the percentage leases.

9

Table of Contents

(d)  Financial Information About Foreign and Domestic Operations and Export Sales

      All of our operations are conducted in the United States.

Item 2.  Properties

(a)  Hotel Properties

      On December 31, 2000, we owned interests in the following 33 hotel properties:

*	Effective February 1, 2000, we commenced operating the Radisson Hotel Mt.  Laurel. We hired JerseyBoy, LLC, a wholly-owned subsidiary of BMC, to manage the hotel pursuant to a management agreement.

**	We sold the Daytona Beach Radisson Resort in January 2001.

10

Table of Contents

(b)  Office Space

      Pursuant to a shared services and office space agreement, we paid BMC approximately $4,900 per month in 2000 for the right to use certain office space and receive certain related services.

Item 3.  Legal Proceedings

      We are subject to various legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of any ultimate liability with respect to these actions will not materially affect our financial statements.

Item 4.  Submission of Matters to a Vote of Security Holders

      There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

EXECUTIVE OFFICERS OF THE REGISTRANT

      Pursuant to Instruction 3 to Item 401(b) of Regulation S-K, the following information is reported below.

      Our executive officers are elected and serve at the discretion of the Board of Directors until their successors are duly chosen and qualified, and are as follows:

      The following is a biographical summary of the business experience of our executive officers.

      Robert W. Boykin has served as our Chief Executive Officer since our formation. He served as the President and Chief Executive officer of Boykin Management Company from 1985 until November 1996. He served as Boykin Management Company’s Executive Vice President from 1981 until 1985.

      Richard C. Conti has served as our Chief Operating Officer since May 1998. In January 2001, Mr. Conti was promoted to President and Chief Operating Officer. Prior to joining us, Mr. Conti was a Principal and Director with Coopers & Lybrand L.L.P. Mr. Conti was responsible for Coopers & Lybrand L.L.P.’s hospitality consulting practice in the Midwest and has been involved in the hospitality industry for over 22 years. Mr. Conti has worked closely with many of the leaders in the industry and brings to us a wealth of industry knowledge and contacts.

      Paul A. O’Neil has served as our Chief Financial Officer since May 1998 and has been our Treasurer since 1997. Mr. O’Neil served as the Chief Financial Officer of Boykin Management Company from 1996 to 1997. He was the Treasurer of Boykin Management Company from 1994 to 1996. Prior to joining Boykin Management Company, he managed the Real Estate Services Group in Arthur Andersen L.L.P.’s, our current auditors, Cleveland office from 1990 to 1994.

      Mark L. Bishop is our Senior Vice President — Development. He served as Senior Vice President-Acquisitions of Boykin Management Company from April 1994 until November 1996. From December 1986 until April 1994, Mr. Bishop was employed by Grubb & Ellis, serving as Vice President/ Senior Marketing Consultant beginning in February 1991.

      Russ C. Valentine joined us in June 1999 as our Senior Vice President — Acquisitions. Prior to joining us, Mr. Valentine served as Senior Vice President of Acquisitions for American General Hospitality, a real estate

11

Table of Contents

      Andrew C. Alexander became our Vice President — Corporate Counsel in July 1997 and was promoted to Senior Vice President and General Counsel in June 1999. From July 1995 until July 1997, Mr. Alexander served as Vice President-Corporate Counsel of Renaissance Hotel Group, N.V., a publicly traded hotel company. From September 1989 until July 1995, Mr. Alexander was an attorney at the law firm of Calfee, Halter & Griswold, LLP.

      There are no arrangements or understandings known to us between any executive officer and any other person pursuant to which any executive officer was elected to office. There is no family relationship between any of our directors or executive officers and any other director or executive officer.

      Employment Arrangements. Robert W. Boykin entered into an employment contract with us in connection with the IPO. The agreement provides for a one-year term that is automatically extended for an additional year at the end of each year of the agreement, subject to the right of either party to terminate the agreement by giving prior written notice of two years. Mr. Boykin is prohibited from competing with us during the term of his employment agreement and for a term of two years thereafter.

      In May 1997 and May 1998, we entered into employment arrangements with Paul A. O’Neil and Richard C. Conti, respectively. The arrangements provide for a one-year term that will be extended for an additional year at the end of each year of the arrangements, subject to the right of either party to terminate the employment relationship by giving six months prior written notice.

PART II

Item 5.  Market for Registrant’s Common Shares and Related Shareholder Matters

(a)  Market Information

      Our common shares are traded on the New York Stock Exchange under the symbol “BOY.” The following table sets forth for the indicated periods the high and low sales prices for the common shares and the cash distributions declared per share:

(b)  Shareholder Information

      As of March 16, 2001, there were 993 record holders of our common shares, including shares held in “street name” by nominees who are record holders, and approximately 15,700 beneficial owners.

12

Table of Contents

      In order to comply with certain requirements related to our qualification as a REIT, our charter limits the number of common shares that may be owned by any single person or affiliated group to 9% of the outstanding common shares.

(c)  Dividend and Distribution Information

      The declaration and payment of future distributions is at the discretion of our Board of Directors and depends on, among other things, our receipt of cash distributions from the Partnership, our results of operations, level of indebtedness, any contractual restrictions, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, economic conditions and other factors considered relevant by our Board. The level of our cash distributions is determined by us in light of our cash needs, including our requirements for investing and financing activities and other anticipated cash needs. There can be no assurance that we will make any such future distributions.

(d)  Sales of Unregistered Securities

      Not applicable.

(e)  Use of Proceeds from Sales of Registered Securities

      Not applicable.

Item 6.  Selected Financial Data

      The following tables set forth selected historical and pro forma operating and financial data for Boykin Lodging Company, the Initial Hotels (predecessor to Boykin) and BMC. The selected historical financial data has been derived from the historical financial statements of Boykin, the Initial Hotels and BMC, respectively, as audited by Arthur Andersen LLP, independent public accountants.

      The pro forma information of BMC is presented as if our March 1998 acquisitions of two hotels leased by BMC and our August 1999 acquisition of the Executive Plaza Hotel leased by ChiBoy were consummated as of January 1, 1998.

      The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and all of the financial statements and notes thereto included elsewhere in this Form 10-K.

13

Table of Contents

BOYKIN LODGING COMPANY

SELECTED HISTORICAL OPERATING AND FINANCIAL DATA

(amounts in thousands, except for per share data)

14

Table of Contents

(1)

The White Paper on Funds From Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in October 1999 defines funds from operations (“FFO”) as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of properties and extraordinary items, plus real estate related depreciation and amortization, and after comparable adjustments for unconsolidated entities and joint ventures. We believe that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flow from operating, financing and investing activities, it provides investors with an indication of our ability to incur and service debt, make capital expenditures and fund other cash needs.

We compute FFO in accordance with standards established by NAREIT which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the NAREIT definition differently than us. FFO does not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income as an indication of our financial performance or to cash flow from operating activities as determined by GAAP as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. FFO may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions, and other commitments and uncertainties. The following is a reconciliation between net income and FFO (in thousands):

15

Table of Contents

INITIAL HOTELS

SELECTED COMBINED HISTORICAL FINANCIAL DATA

(amounts in thousands)

(A)	On February 8, 1996, the Lake Norman Holiday Inn and Lake Norman Hampton Inn were acquired by a Boykin Affiliate. The acquisition was accounted for as a purchase and, accordingly, the operating results of the Holiday Inn and Hampton Inn have been included in the above operating data commencing February 8, 1996.

16

Table of Contents

BOYKIN MANAGEMENT COMPANY

SELECTED HISTORICAL AND PRO FORMA OPERATING AND FINANCIAL DATA

(amounts in thousands)

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Boykin’s Formation and Significant Events

      We completed our initial public offering (“IPO”) in November 1996 and, through Boykin Hotel Properties, L.P., an Ohio limited partnership (the “Partnership”), we acquired nine hotel properties. Boykin Lodging Company currently has a 92.1% ownership interest in, is the sole general partner of and does all its business through the Partnership. Since the IPO, we have acquired 25 hotels (including the ten-hotel portfolio discussed below) by raising capital through a combination of common share issuances, various debt financings, capital from strategic joint venture partners and cash flow generated from operations.

	•	In 1998, we raised net proceeds of approximately $106.3 million in a follow-on public equity offering of 4.5 million common shares.
	•	In the same year, we acquired a portfolio of ten Doubletree-licensed hotels through a merger with Red Lion Inns Limited Partnership valued at $271.3 million. In the transaction, we issued 3.1 million common shares, paid $35.3 million in cash to the Red Lion partners and assumed liabilities of approximately $155.7 million.
	•	At the end of 2000, we had $311.4 million of debt outstanding under various debt instruments.
	•	We currently have strategic alliances with three hotel operators and own four hotels with them through joint venture structures. In 1999, we also formed a joint venture with AEW Partners III, L.P. (“AEW”) and, through that joint venture, we purchased a hotel located in downtown Chicago.

      At the end of 2000, we owned interests in 33 hotels containing a total of 9,236 guest rooms located in 19 different states. We sold one hotel in January 2001. Our principal source of revenue is lease payments from lessees pursuant to percentage lease agreements. Percentage lease revenue is based upon the room, food and beverage and other revenues of our hotels. The lessees’ ability to make payments to us pursuant to the percentage leases is dependent primarily upon the operations of the hotels.

17

Table of Contents

RESULTS OF OPERATIONS

      The following discusses our results of operations for 2000 compared to 1999 and 1999 compared to 1998. Because the rent we collect from BMC and its subsidiaries constitutes a significant portion of our lease revenues, we believe that a discussion of the historical and pro forma operations of BMC is also important to understand our business. The pro forma information of BMC is presented as if our March 1998 acquisitions of two hotels leased by BMC and our August 1999 acquisition of the Executive Plaza Hotel leased by ChiBoy, a wholly-owned subsidiary of BMC, were consummated as of January 1, 1998.

Boykin Lodging Company

   Results of Operations Year Ended December 31, 2000 Compared to Year Ended 1999

      Our percentage lease revenue increased to $85.9 million in 2000 from $85.3 million in 1999. This increase was due to increased percentage lease revenues from our lessees of $2.4 million, offset by a $1.8 million decrease in percentage lease revenue attributable to our foreclosure of the Radisson Hotel Mt. Laurel lease in February 2000 from the prior lessee. Instead of percentage lease revenues, the hotel’s revenues of $6.7 million and hotel operating expenses of $5.4 million are reflected in the results of operations in 2000. The overall impact of the foreclosure was a decrease in net income of $.7 million in 2000. Percentage lease revenue payable by BMC is $71.9 million, or 83.7% of total percentage lease revenue in 2000, compared to $70.9 million, or 83.1% of percentage lease revenues 1999.

      The main driver of our percentage lease revenues is the hotel’s revenues, which are driven by ADR, occupancy, and REVPAR. During 2000, the ADR at our comparable hotels (including the Executive Plaza Hotel acquired in 1999 but not consolidated in Boykin’s results of operations) increased to $94.29 compared to $91.23 in 1999. The weighted average occupancy decreased to 67.5% from 68.3% in 1999. This resulted in a 2.1% increase in REVPAR to $63.61 in 2000, compared to $62.32 in 1999. The following table sets forth the pro forma operating data of the hotels owned by us as of December 31, 2000, without regard to when we acquired the hotels.

(a)	Includes hotels we owned in both periods.
(b)	Includes all hotels we owned at the end of 2000, including predecessors’ results.

No assurance can be given that the trends reflected in this data applicable to the hotels will continue or that ADR, occupancy, and REVPAR will not decrease as a result of changes in national or local economic or hospitality industry conditions.

      Income before minority interests and extraordinary item decreased from $19.7 million in 1999 to $9.3 million in 2000. As a percent of total revenues, income before minority interests and extraordinary item decreased to 10.0% in 2000 from 22.9% in 1999, primarily resulting from:

	•	a $7.0 million charge for unrealized losses on the carrying value of certain Doubletree hotels held for sale;
	•	an increase in interest expense to $24.3 million in 2000, or 25.9% of total revenues, compared to $20.6 million, or 23.9%, in 1999, primarily due to higher interest rates and an increase in the average outstanding debt balances in 2000; and
	•	an increase in real estate related depreciation and amortization, as a percent of percentage lease revenue, to 35.4% in 2000 from 33.9% in 1999

18

Table of Contents

      Increased capital expenditures from renovations increased depreciation expense in 2000 over 1999. Higher interest rates on our variable rate debt, which increased to approximately 8.4% in 2000 from 7.0% in 1999, along with higher average outstanding debt balances, caused interest expense to increase over 1999.

      Net income was $7.7 million in 2000 compared to $18.1 million in 1999. As a percent of total revenue, net income decreased from 21.0% in 1999 to 8.2% in 2000. Minority interest applicable to the operating partnership and joint venture partnerships included in income before extraordinary item was $.9 million in 2000, or 1% of total revenues, compared to $1.6 million, or 1.9% in 1999. The extraordinary loss (net of minority interest of $59) of $686 in 2000 represented the write-off of deferred financing costs associated with our former line of credit which was replaced in the third quarter of 2000.

      Our FFO in 2000 was $46.0 million compared to $48.2 million in 1999. For a definition of FFO, reconciliation of net income to FFO and discussion of why we believe FFO is an important measure to investors of a REIT’s financial performance, please see Item 6. “Selected Financial Data” on page 15.

   Results of Operations Year Ended December 31, 1999 Compared to Year Ended 1998

      Our percentage lease revenue increased to $85.3 million in 1999 from $69.7 million in 1998, primarily because we had a full year of results of operations in 1999 for the 14 hotels we acquired in 1998, as well as increased percentage lease revenues in 1999 from hotels that underwent significant renovations in 1998. Percentage lease revenue payable by BMC represented $70.9 million, or 83.1% of total percentage lease revenue in 1999, compared to 81.3% in 1998. The increase in the amount of 1999 percentage lease revenues from BMC is attributable to a full year of lease payments in 1999 for the ten Doubletree Hotels acquired in May 1998, which are leased to a subsidiary of BMC. Acquisition and asset management fees related to our acquisition of the Executive Plaza Hotel through our new venture with AEW caused interest and other income to increase to $.9 million in 1999 from $.4 million in 1998.

      Income before minority interests and extraordinary item decreased from $22.2 million in 1998 to $19.7 million in 1999. As a percent of total revenues, income before minority interests and extraordinary item decreased to 22.9% in 1999 from 31.7% in 1998, primarily resulting from:

	•	an increase in interest expense to $20.6 million in 1999, or 23.9% of total revenues, compared to $13.9 million, or 19.8%, in 1998, due to an increase in the average outstanding debt balances in 1999. New debt associated with our 1998 acquisitions and the Red Lion merger increased our interest expense in 1999 as these borrowings, outstanding for a full year, contained interest charges for a full year.
	•	an increase in real estate related depreciation and amortization, as a percent of total revenue, to 33.5% in 1999 from 30.3% in 1998 because hotel acquisitions in 1998 increased the size of our hotel portfolio and were reflected in the full year’s results in 1999.
	•	general and administrative expenses increased, as a percentage of total revenue, to 6.6% in 1999 from 5.3% in 1998, primarily because of the incremental costs associated with hiring management personnel to support the increased reporting and support requirements of a larger portfolio of hotels.

      Net income was $18.1 million in 1999 compared to $19.0 million in 1998. Minority interest applicable to the operating partnership and joint venture partnerships included in income before extraordinary item was $1.6 million in 1999, or 1.9% of total revenues, compared to $2.1 million, or 2.9% in 1998. The extraordinary charge (net of minority interest of $.1 million in 1998) of $1.1 million in 1998 represented the write-off of deferred financing costs associated with our former $150 million secured credit facility which was replaced with a new, increased unsecured facility.

19

Table of Contents

BMC

   Actual Results of Operations Year Ended December 31, 2000 Compared to Year Ended 1999

      For the year ended December 31, 2000, BMC had hotel revenues of $266.7 million compared to $252.4 million in 1999. The increase was primarily due to the addition of the Executive Plaza Hotel in which ChiBoy commenced operations at the end of August 1999.

      Percentage lease expense during 2000 was $78.8 million, or 29.5% of hotel revenues, compared to $73.3 million, or 29.0% of hotel revenues, in 1999. Departmental and other hotel operating expenses, consisting primarily of rooms expenses, food and beverage costs, franchise fees, utilities, repairs and maintenance, and other general and administrative expenses of the hotels, were $187.2 million in 2000 compared to $178.6 million in 1999. As a percent of hotel revenues, the departmental and other hotel operating expenses decreased to 70.2% in 2000 from 70.7% in 1999, because of increases in hotel revenues at a higher rate relative to increased expenses incurred.

   Actual Results of Operations Year Ended December 31, 1999 Compared to Year Ended 1998

      For the year ended December 31, 1999, BMC had hotel revenues of $252.4 million compared to $235.7 million in 1998. The increase was due to the commencement of the Executive Plaza Hotel lease in August 1999, a full year of results in 1999 for two hotel leases that commenced in March 1998, and an increase in 1999 revenue at hotels that underwent significant renovations in 1998. BMC recorded net income of $2.7 million in 1999 compared to $47,000 in 1998.

      Percentage lease expense during 1999 was $73.3 million, or 29.0% of hotel revenues, compared to $67.4 million, or 28.6% of hotel revenues, in 1998. Departmental and other hotel operating expenses, consisting primarily of rooms expenses, food and beverage costs, franchise fees, utilities, repairs and maintenance, and other general and administrative expenses of the hotels were $178.6 million in 1999 compared to $170.2 million in 1998. As a percent of hotel revenues, the departmental and other hotel operating expenses decreased from 72.2% in 1998 to 70.7% in 1999, because of increases in hotel revenues at a higher rate relative to increased expenses incurred.

   Pro Forma Results of Operations Year Ended 1999 Compared to 1998

      For the year ended December 31, 1999, BMC’s pro forma hotel revenues would have been $263.9 million, an increase of $9.4 million, or 3.7%, over pro forma hotel revenues for the year ended December 31, 1998 of $254.5 million. The increase in revenues for 1999 compared to 1998 is primarily the result of increases in occupancy and average daily rates experienced at many of the BMC hotels, primarily those which were disrupted in 1998 while undergoing significant renovations.

      Pro forma percentage lease expense would have increased 4.7%, to $77.7 million in 1999, from $74.2 million in 1998 because of increased hotel revenues. Pro forma departmental expenses and other hotel operating expenses of BMC would have been $184.9 million in 1999 compared to $180.3 million in 1998, an increase of 2.6%. As a percentage of hotel revenues, these expenses would have decreased slightly from 70.8% in 1998 to 70.1% in 1999.

      Pro forma net income of BMC would have been $3.5 million in 1999 compared to net income of $2.0 million in 1998.

Liquidity and Capital Resources

      Our primary source of cash to meet our cash requirements, including distributions to shareholders, is our share of the Partnership’s cash flow from the percentage leases. The lessees’ obligations under the percentage leases are largely unsecured and the lessees’ ability to make rent payments to the Partnership under the percentage leases are substantially dependent upon the lessees’ ability to generate sufficient cash flow from the operation of the hotels.

      Westboy, LLC (“Westboy”), a wholly-owned subsidiary of BMC, leases the ten Doubletree-licensed hotels owned by and Red Lion Inns Operating L.P. (“OLP”) pursuant to a percentage lease agreement. The initial term

20