Hotel Owners Sweat Trump Travel Risk As Debt Tsunami Looms

With steep new tariffs bearing down, a travel ban in the works and persistent talk of annexing foreign land, hotel owners are wary of the potential travel impacts of President Donald Trump’s policies.

Additional uncertainty has piled on as companies work to complete their recoveries in the face of a growing wave of loan maturities set for this year. 

“As is with a lot of things going on in the economy, it's very hard to forecast what the president is going to do, and it is conceivable that this isolationism could have a longer-term impact, which is something we're monitoring carefully,” said Mitchell Hochberg, president of The Lightstone Group, a private real estate firm that developed the Moxy hotel group.

Moxy was on a growth tear, opening dozens of U.S. locations after its founding in 2014, with a particular focus on trendy areas like St. Petersburg, Florida, and Boulder, Colorado. Founded in Milan, Italy, and now part of the Marriott group of hotels, Moxy counts on international travelers. 

Forecasted drops in international tourism and broader economic concerns could lead to the company reconsidering some of its strategies, Hochberg said. Less interest from foreign guests might mean redirecting advertising dollars from international travelers to those in the U.S.

Coastal markets like California, where international travel has historically been a major source of business for hotels, are up against financing deadlines. The Line LA Hotel, owned by RECP Sydell Wilshire, an entity with ties to grocery magnate Ron Burkle, defaulted earlier this year.

Several hotels in San Francisco, including the downtown Four Seasons, are also struggling as the city's inbound tourism, particularly from Asia, has failed to regain prepandemic levels.

Tourism Economics in December downgraded the outlook for international travel in 2025 based on the actions Trump took during his first term. In late February, Tourism Economics released an update, predicting a 5% decline in inbound travelers in the U.S. and labeling it a downside scenario based on the president's rhetoric and trade policy. 

In the past few weeks, the downside scenario became the baseline, according to Tourism Economics Director of Industry Studies Aran Ryan. A new forecast released to subscribers March 28 predicted a 9.4% decrease in international visitors, the steepest drop the organization has predicted in its 20 years. Last year, international visitors grew by 9.1%. 

For hotels in gateway markets, such a drop could add up. Thirty percent of the business at Moxy’s New York City locations comes from overseas stays. At a time when booking windows have become shorter due to online booking, the emotional, reactive nature of these conflicts could quickly drive a dip in foreign bookings. 

Moxy’s New York locations have seen a 5% drop in international booking year-over-year over the last two months, said Hochberg, who believes international travelers are “protesting by not coming.” 

Meanwhile, 35% of hotel and motel loans will come due this year, according to the Mortgage Bankers Association, and $48B in CMBS loans are slated to come due over the next 24 months, according to CRED iQ.

Roughly 20% of lodging loans facing maturity in 2025 are delinquent, according to Trepp. 

The loans are coming due during a period of challenging financials and delayed renovations, according to Kevin Davis, CEO of JLL Hotels & Hospitality for the Americas. Many hotels during the Covid era delayed renovations, spending funds dedicated to upgrades to stay open. 

This year, many of those hotels face stronger demand to make up for those lost years and renovate. In addition, private equity, which tends to look at assets in three to five-year cycles, has seen prepandemic hotel assets improve performance from the dark days of Covid and now expects the properties to be primed for sale.

Higher interest rates, lower property values and lower loan-to-value requirements imply greater challenges in refinancing maturing loans. Hotel owners have to put up more equity, invite rescue capital, sell the property at a discount or go into distress as a last resort and hope lenders will provide workout opportunities. Hochberg said there’s “no doubt” lenders will be concerned about the uncertainty around international travel.

“The bottom line is, you've had a number of owners and private equity investors that have been in the hotels for a long time,” Davis said. “The hotels haven't been renovated. If you then layer in a debt maturity, those factors will drive a significant amount of transaction volume because the loan has to be refinanced and the hotel needs to be invested in.” 

But even with a worsening forecast, it is still relatively early to truly gauge the impact of these policies, Davis said. Many of the macro trends around group and business travel remain solid, making it hard to determine how market volatility will ultimately impact travelers and therefore hotel revenue. 

“Am I concerned about it? I would be foolish not to be concerned,” Moxy’s Hochberg said of foreign animosity tainting travel plans. “Do I think it's existential? Absolutely not. It's not good for business, but I wouldn't categorize it as catastrophic.”

JLL projects 15 to 25% growth in global hotel investment volume this year due to a mix of impending loan maturities, deferred capital expenditure and private equity demands.

Lenders are willing to work with hotel owners and try to drag it out as long as possible, Singh said.

But private equity groups motivated to sell may not be able to kick the can down the road with renovations or convince the brands to give them more breathing room.

If you’re a small player and have difficulty refinancing, you’re “going to look for a white knight,” said Amrik Singh, a University of Denver professor who studies hotel finance and the hospitality CMBS market.

“You're going to look for rescue capital,” he said. “You may have to sell the hotel at a lower price because you were in a desperate situation. These opportunities are probably going to arise as time goes on.”

Other forces playing a part in hotel performance include a worsening labor shortage, the rising cost of paying staff, the cost of materials for making upgrades and the tariffs themselves, which will contribute to rising costs. Economic turmoil and the specter of a recession also weigh heavily on hotel owners.

“We’re so closely tied to the economy and so dependent on supply and demand,” said Singh. “The impact of external events is very rapid. We’re the first ones in trouble, and the first ones to recover.”