BLOG POST Turn Refinancing Pressure Into A Higher-Value Hotel Asset

By Walter “J.R.” Dembiec, Jr., Brand President, Reside, a Wyndham Residence

Around 30% of U.S. hotel mortgage balances are due to mature in 2026, while borrowing costs are roughly 40% higher than when many of those loans were originally written. For owners facing a refinancing deadline, simply rolling over existing debt may no longer work.

That creates an uncomfortable choice: inject more capital, accept a lower valuation, or sell. But there is another option that deserves more attention: change the economics of the asset before the refinancing decision is made.

The problem isn't just the cost of debt

Higher interest rates are only part of the pressure. Hotel owners are also dealing with inflation, slower growth and rising operating costs, making it harder to generate the margins needed to support today's valuations.

This changes the refinancing equation.

A lender isn't just looking at what a property was worth five years ago. The question is whether its future cash flow can support the debt being placed on it today.

That puts a premium on properties with lower operating costs, more predictable demand and a more resilient revenue profile.

And this is where a more flexible operating model becomes increasingly relevant.

The opportunity is to serve multiple demand segments

Rather than thinking of this as a fixed lodging category, owners can look at flexible stay as a more relevant model for today's market: one that combines the stability of longer-stay demand with the revenue opportunity of transient and short-term business, while still benefiting from a more efficient operating structure where appropriate.

Repositioning a hotel does not have to mean prioritizing extended stay at the expense of transient or short-term guests.

The opportunity is to create a flexible operating model that captures each of these demand streams, rather than forcing the asset into a single-use lodging category.

Depending on the location, building configuration and market demand, a property can serve longer-stay guests while continuing to capture shorter-term and transient revenue.

That flexibility matters. Rather than relying on one customer segment, owners can create a broader demand base and potentially improve the resilience of the asset's income stream.

Reposition before the deadline

The mistake is waiting until the mortgage maturity date to start thinking about the property's future.

By then, the owner may be negotiating from a position of weakness, with limited time to demonstrate a different earnings profile to lenders or buyers.

Repositioning should begin much earlier. That means asking fundamental questions: Is the current use still the highest-value use of the building? Can the operating model be made more efficient? Is there an opportunity to capture longer-stay demand without losing transient revenue? And can the asset generate the kind of predictable income that today's capital markets reward?

These aren't simply operational questions. They are asset-value questions.

The U.S. real estate market is already showing where investor preferences are heading. Investment activity is recovering, with U.S. real estate investment up 16% to $605 billion in 2026, according to CBRE's 2026 Midyear Review, as capital increasingly favors assets with durable income and defensible fundamentals.

For hotel owners, that creates an important distinction. The choice isn't necessarily between refinancing and selling. There is a third path: reposition the asset, strengthen its income profile and approach the refinancing conversation from a position of greater value.

The refinancing deadline doesn't have to be the moment when a hotel owner gives up.

It can be the deadline that prompts a better question: What could this asset be worth if we operated it differently?

For owners willing to ask that question early, repositioning may be less about protecting against a downturn and more about unlocking the next chapter of the asset's value.

About the Author

Walter “J.R.” Dembiec, Jr. is Brand President of Reside, a Wyndham Residence, leading the company’s growth across upscale extended stay through its 10-year strategic partnership with Wyndham Hotels & Resorts. He previously held senior roles at public and private companies, including Coldwell Banker, Century 21 Real Estate, Securitas and Cendant Corporation. Visit: partnerwithreside.com.