Risk Factors

We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. You should only purchase these securities if you can afford a substantial loss of your investment. See the section entitled “Risk Factors” in prospectus for a discussion of the risks which should be considered in connection with your investment in our common stock, including:

• This is an offering of a newly formed entity with limited operating history, and an investment in our shares is speculative. You should consider this prospectus in light of the risks, uncertainties and difficulties frequently encountered by companies that are, like us, in their early stages of development.
• No public market currently exists for our securities, and we have no current plans to list our securities on a national securities exchange. If you are able to sell your shares, you would likely have to sell them at a discount from the price at which you purchased them from us.
• You should consider your investment in our shares a long-term investment. If we do not successfully implement a liquidity event, you may suffer losses on your investment, or your shares may continue to have limited liquidity. We are not required to provide for a liquidity event.
• Our advisor, Procaccianti Hotel Advisors, LLC, and its affiliates will face conflicts of interest, including significant conflicts created by our advisor’s and its affiliates’ compensation arrangements with us, including compensation which may be required to be paid to our advisor if our advisor is terminated.
• Conflicts of interest may also arise in connection with other investment vehicles sponsored by our sponsor, Procaccianti Companies, or its affiliates, which could result in decisions that are not in the best interests of our stockholders, including decisions relating to the allocation of investment opportunities among us and such other investment vehicles.
• We do not have any employees and will rely entirely upon our advisor to manage our business and our property manager or third parties to manage hotels we acquire. The key personnel of our advisor and property manager will face conflicts of interest regarding the amount of time they allocate between our business and other businesses for which they perform services.
• In order to qualify as a REIT, we cannot directly operate our hotel properties, and our returns will depend on the management of our hotel properties by our property manager, which is also an affiliate of Procaccianti Companies.
• Our property management agreements will require our taxable REIT subsidiaries, or TRSs, which are fully taxable corporations in which we hold interests, to bear the operating risks of our hotel properties. Any increases in operating expenses or decreases in revenues may have a significant adverse impact on our TRSs and thus our earnings and cash flow.
• We will depend on our advisor and its affiliates to conduct our operations, and we will depend on our dealer manager and its affiliates to conduct this offering and certain administrative functions for us; thus, adverse changes in their financial health or our relationship with them could cause our operations to suffer.
• Our charter does not restrict us from paying distributions from any particular source, which means that we could use an unlimited amount of offering proceeds and borrowings, as well as proceeds from the sale of assets and the waiver or deferral of fees otherwise owed to our advisor, to pay distributions. Any of these distributions may reduce the amount of capital we ultimately invest in properties and other permitted investments, and negatively impact the value of your investment, especially if a substantial portion of our distributions is paid from offering proceeds. Our board of directors has adopted a policy to refrain from funding distributions with offering proceeds; instead, we plan to fund distributions from cash flows from operations and capital transactions (other than net proceeds from this or other securities offerings, but which may include the sale of one or more assets). Therefore, we do not expect to use return of capital sources to pay distributions. However, our charter does not restrict us from paying distributions from any particular source, including proceeds from securities offerings, and our board of directors has the ability to change our policy regarding the source of distributions.
• We will pay substantial fees and expenses to our advisor, our property manager, our dealer manager, and their affiliates; these payments increase the risk that you will not earn a profit on your investment.
• This is a “blind pool” offering because we have not yet identified all of the properties we may acquire with the offering proceeds and have a limited prior operating history. You will not have the opportunity to evaluate the merits or risks of such investments before you purchase our securities. We may change our investment objectives and strategies without stockholder consent.
• This is the first public offering sold by the dealer manager. Our ability to raise money and achieve our investment objectives depends on the ability of the dealer manager to successfully market our offering.
• We may incur substantial debt, which could hinder our ability to pay distributions to our stockholders or could decrease the value of your investment if income from, or the value of, the property securing the debt falls.
• Our failure to qualify as a REIT for federal income tax purposes could materially decrease cash available for distributions and limit our ability to make distributions to our stockholders.