Hospitality
Recapitalizing Distressed Hospitality Assets
A framework for repositioning underperforming hotels through bridge debt, preferred equity, and operational alignment.
August 12, 2025 · Kismet Kapital
Distress in hospitality rarely resolves cleanly. The capital plan must align flag, operator, PIP scope, and senior debt structure — and the equity holder typically needs to accept a recap, not a bailout.
Building a credible plan
A defensible recap starts with realistic RevPAR penetration, a fully scoped PIP, branded vs. independent positioning, and a clear hold horizon. Lenders will test all of it.
Capital structure
Most viable recaps blend senior bridge debt with preferred equity sized to total cost — keeping the senior loan within debt-yield comfort and using preferred equity to absorb execution risk.