Owners of Hilton Worldwide hotels are more likely to be delinquent on their mortgages than those who own Marriott International, IHG Hotels & Resorts or Hyatt properties, according to a new KBRA analysis that exposes widening credit divergence within the lodging sector. Nearly sixteen per cent of all securitised debt tied to Hilton hotels is delinquent, more than twice the marketwide average, the rating agency reported. The findings underscore how brand-level operating performance—not just macro recovery or asset-class tailwinds—is driving debt outcomes in commercial real estate.

There are 724 Hilton properties encumbered by a total of $15.9bn in CMBS loans, of which $2.5bn is not current, KBRA found. By comparison, 965 Marriott International hotels are tied to $23.2bn of CMBS loans, but $1.6bn of that pool is behind on mortgage payments for a delinquency rate of seven per cent. The only other two hotel brand parents with more than $1bn of CMBS loans are IHG, with a delinquency rate of 12.5 per cent, and Hyatt. Just $90m of the $3.3bn of securitised debt tied to the Pritzker family's Chicago-based chain, or 2.8 per cent, is delinquent.

A substantial portion of the troubled Hilton debt can be traced to a handful of large hotels in struggling downtowns. Two hotels in San Francisco account for $725m of the delinquent balance alone. But the broader underperformance of debt tied to McLean, Virginia-based Hilton is reflected in its overall business, which has lagged its hospitality peers. Hilton's average revenue per available room grew by 0.4 per cent in 2025, while Marriott's grew two per cent, Hyatt's grew 2.9 per cent and IHG's grew 1.5 per cent, according to the companies' annual reports.

Hilton's asset-light model, in which it licenses out its brand but owns little real estate, has allowed it to post healthy profits, with nearly $1.5bn in net income in 2025, and keep its pipeline expanding. It opened 97,000 rooms last year and had another 520,000 in the pipeline. Yet some of its biggest properties never recovered from the pandemic. Park Hotels & Resorts in 2023 handed over the keys of the Hilton Union Square and Parc 55 hotels in San Francisco, which were placed in receivership.

The nearly 3,000-room portfolio, which alone makes up eight per cent of San Francisco's hotel stock, sold for $408m after its original $725m CMBS loan ballooned to an outstanding balance of $874m. The new owners, Newbond Holdings and Conversant Capital, modified and assumed the loan, which is still in special servicing, according to commentary in the Morningstar Credit Analytics loan database. The distress illustrates how even trophy assets in gateway markets have struggled to refinance when operations fail to recover in line with initial underwriting.

Distress that looks contained at the brand level rarely stays contained once correlations tighten across troubled metros, family office advisor Jaf Glazer has cautioned.

The oldest continually operated hotel in the United States, which opened in 1871 and was acquired by Conrad Hilton in 1945, has been another source of distress for investors in its debt. The Palmer House hotel on State Street in Chicago has been in a foreclosure dispute since 2020, when bondholders sought to take over the hotel from Thor Equities, which purchased the property from Hilton in 2005. The hotel's complex ownership structure—separate Thor affiliates own the hotel, retail and parking garage—was the source of a related lawsuit by Wells Fargo as trustee against JPMorgan Chase, which originated a $330m loan for Thor then securitised the debt.

Bondholders have sought to repossess the 1,641-room property, but the loan was declared unrecoverable last year, and its servicer stopped advancing interest payments, according to commentary via Morningstar. Chicago and San Francisco have been among the markets where hotels' recovery has been slowest. Lodging Analytics Research & Consulting projects both will be in the bottom fifteen among the 64 largest markets in terms of RevPAR growth over the next five years, according to KBRA. The markets have the highest delinquency rates in the country, both of which are largely driven by the troubled Hilton assets.

Despite declining international visits, the U.S. hotel industry had a strong start to 2026 before the Iran war and consequent rise in energy prices clouded the industry's outlook. That could mean more difficulties for borrowers who are already behind on their debt. KBRA's researchers wrote in the report that concentration risk within certain chains and elevated delinquencies in select markets highlight the importance of asset selection and market conditions. They added that these disparities may deepen as macroeconomic headwinds persist and operating costs remain elevated.