5 Costly Mistakes Hotel Owners Make When Financing- and How to Avoid Them

By Katie Vivian, Hotel Loan Originator

When it comes to hotel financing, strategy matters just as much as structure. Over the years, I’ve seen hotel owners miss out on better loan terms—or lose deals entirely—because of avoidable mistakes.

Whether you’re refinancing a stabilized asset or sourcing construction debt, understanding what not to do is just as important as knowing your options. Here are five of the most common—and costly—mistakes hotel owners make when seeking financing:

1. Waiting Too Long to Refinance

Permanent loan closings often take 60–90 days. Start early and plan ahead—rushing limits your options.

2. Using Too Many Brokers or Mortgage Bankers

Once lenders see a deal more than once, it significantly loses value. Stick with one trusted advisor who can run a full-market process.

3. Not Understanding Your Property’s Cash Flow Story

Be ready to explain the “why” behind your numbers. Renovations, seasonality, and one-time events matter to underwriters.

4. Focusing Only on Rate, Not Structure

Prepay penalties, recourse, reserves, amortization, and flexibility often matter more than 10bps of rate difference.

5. Misaligning the Lender with the Deal

Know which lenders are right for your asset type, flag, and business plan. Not every deal fits every capital source.

How to Avoid These Hotel Financing Mistakes

One of the best ways to avoid these common pitfalls is by working with a trusted mortgage banker like Largo Capital.

With over 35 years of experience, Largo maintains daily contact with lenders across the Life Company, CMBS, Debt Fund, Bank, and Credit Union spectrum. Our deep market knowledge and lender relationships give us insight into which financing options are actually available—and which ones are best aligned with your goals.

In today’s dynamic capital markets, relationships and strategy matter more than ever.