How can hotel owners, managers and operators make improvements to property technologies, energy supply or building materials while also grappling with a capital-constricted market and rising operating costs?
As an emerging solution, CounterpointeSRE provides C-PACE financing for hotels for both new construction and renovations that can also alleviate burdensome debt and equity terms.
In today’s rapidly evolving hospitality landscape, hotel owners are under pressure to upgrade their properties for greater energy and water efficiency and resiliency. They must plan for these upgrades while managing market volatility, tight financial constraints, onerous capital stacks, growing tourism, and constant changes to the built environment.
Commercial Property Assessed Clean Energy (C-PACE) financing has emerged as an innovative, long-term, low-cost solution that allows hoteliers to access capital for necessary improvements like HVAC upgrades, renewable energy installations, water conservation, and other measures that improve property resiliency and customer satisfaction.
Through C-PACE, upgrades to hotels can be up to 100% funded via a special property tax assessment. This eliminates the need for upfront capital outlays and enables operators to lower operating costs, enhance property values, and strengthen their competitive position. This is a significant advantage in a market where guest and investor satisfaction remains a top priority.
In an increasingly volatile commercial real estate market, C-PACE financing has emerged as a reliable and cost-effective solution for recapitalization, recapturing Capex reserves, and construction financing. This alternative means of financing property improvements helps hotel assets owners to achieve positive cash flow early in the development process while also improving ROI and the capital structure.
Recapitalization and Repositioning:
Recapitalization is the process of restructuring a property’s capital structure to optimize financial performance and increase its value for investors.
- C-PACE financing can replace expensive bridge or mezzanine debt, or preferred equity with lower-cost debt that improves the overall capital structure and reduces debt service burden
- C-PACE also allows property owners to retroactively finance qualifying energy efficiency, renewable energy, and resiliency improvements already completed (usually within the past 1–3 years, depending on the jurisdiction). The proceeds can be used to fund new business needs, increasing the value and quality of the property
Case study: Four Seasons San Francisco | Refinancing/Repositioning
- Four Seasons San Francisco was renovated and rebranded using C-PACE
- Funding was used for sustainable improvements to plumbing, building envelope, and electrical systems, alterations which increased value of the property.
- To learn more about this project, please contact us.
Case Study: Crazy Water Hotel | Recapitalization after extensive renovations
- Energy efficiency, LED lighting, and low-flow water fixtures allow the hotel to lower its operating costs while its historic charm remains intact
- Read more about this project here.
Recapture of Capex Reserves
Capital expenditure (Capex) reserves fund long-term investments like infrastructure, equipment, or technology upgrades, shaping a company’s growth trajectory by setting aside funds for future improvements, modernization, and resiliency efforts.
- C-PACE allows hotels to finance capex projects (energy-efficient HVAC, windows, plumbing, solar, etc.) instead of drawing from capex reserves and other funds used for long-term property alterations
- This frees up reserve funds for brand management and customer satisfaction improvements, further increasing property value.
New Construction & Refinancing
C-PACE financing is non-recourse and comes at a lower cost than other sources of capital, boosting IRR. C-PACE also can extinguish construction debt within 3 years of completion with no required financial or operating covenants, making new hotel construction less burdensome for both investors and owners.
- New Construction: C-PACE funds up to the total eligible costs for energy efficiency, hotel resiliency and resource conservation measures for new hotel construction, leading to reductions in the necessity of upfront equity
- Refinancing: Often, C-PACE funding can be used to refinance existing loans while also covering previous property improvement plans (PIP)
Market Trends and Future Applicability
According to the annual AHLA report, many hotels are optimizing their distribution channels to improve operational efficiency marking the increasing desire to modernize and improve hotel infrastructure internally, even in the capital-constricted market.1
Additionally, property operations and maintenance, sales and marketing, and IT expenses each rose by nearly 5% from 2024 to 2025, further intensifying financial pressures on hotel operations.2 Hoteliers face a crossroads between increasing prioritization of property improvements while also grappling with increasing operating expenses; C-PACE financing can address both.
Also, hotel owners notice travelers emphasizing an increasing appetite for cultural immersion, sustainable travel, and unique adventures.1 C-PACE financing equips hotels with the means to quantify and advertise sustainable development and performance increases.
1. American Hotel & Lodging Association. (2025). 2025 state of the industry report. https://www.ahla.com/sites/default/files/25_SOTI.pdf
2. CBRE Hotels Research. (n.d.). U.S. monthly trends (SUP-174). https://pip.cbrehotels.com/publications-data-products/trends/u-s-monthly-trends-sup-174-sup