Hospitality, Entertainment Venues and Gaming

Business Hotels Struggle as Lenders Balk at Refinancing

About $31 billion worth of commercial mortgage-backed securities loans backed by hotels are set to mature by 2024 — roughly 30% of the total of nearly $102 billion in securitized hotel loans in the U.S. — and some hotels that rely on business travel and conferences are facing a reckoning as lenders demand more capital from them to refinance — or tell them not to come back at all, according to an analysis at Many hotel loans are floating-rate packages with three-year terms, giving hotel owners more exposure to interest-rate hikes, with a constant need to refinance their debt. Hotels in business districts that cater to business travelers and conference attendees are struggling to refinance loans on properties that have seen values plunge during the pandemic. Unlike their counterparts geared to resurgent leisure travel and tourism, business-oriented hotels still are suffering from depressed occupancy levels as the rise of remote work shapes a new paradigm with less business travel. Lenders that had offered loan extensions or forbearances in the early days of the pandemic are less likely to lend to the same borrowers because of economic uncertainties facing those hotels, according to a report this week in the Wall Street Journal. Lenders are requiring hotel owners to put up more capital before they refinance loans on properties that have seen values shrinking — in some cases telling the owners nine months in advance of a loan’s maturity that they have no intention of extending or refinancing the loan.
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