What collateral secures the financing that Caption By Hyatt provides to hotel owners?

According to Caption By Hyatt's 2025 Franchise Disclosure Document, the financing Caption By Hyatt provides to hotel owners can be secured or unsecured. For secured financing, these receivables are secured mortgage loans, meaning they are collateralized by the underlying hotel properties. This arrangement means that if a hotel owner defaults on their loan, Caption By Hyatt has a legal claim to the hotel property itself, which can then be sold to recoup the outstanding debt.

However, Caption By Hyatt also offers unsecured financing to hotel owners or unconsolidated hospitality ventures. These financing receivables are primarily individual loans and other types of unsecured financing arrangements. Unlike secured loans, these are generally subordinate to senior financing and do not have specific collateral tied to them. Repayment terms can vary and may depend on the future cash flows of the hotel or unconsolidated hospitality venture. This introduces a higher level of risk for Caption By Hyatt, as recovery of the loan is dependent on the financial performance of the hotel or venture.

Caption By Hyatt assesses all financing receivables for credit losses quarterly, establishing an allowance to reflect the net amount expected to be collected. This assessment includes analyzing factors such as current economic conditions, industry trends, and specific risk characteristics of the financing receivable, including capital structure, loan performance, market factors, and the underlying hotel performance. Adjustments to credit losses are recognized in other income (loss), net on their consolidated statements of income. This proactive approach to managing credit losses is crucial, especially given the presence of both secured and unsecured financing options with varying risk profiles.