How to Finance a Hyatt Select Franchise: Conversion Hotel Costs
By Chris Cornella
A Hyatt Select franchise loan funds one of Hyatt’s newest flags: an upper-midscale, transient hotel built to work as either a ground-up project or a conversion of an existing property. Many deals reposition an existing hotel, so financing often blends acquisition or refinancing, renovation and working capital.
US Professional Funding is not affiliated with, sponsored by or endorsed by Hyatt Select or Hyatt; the name is used only to describe the business. Figures from the franchisor’s disclosure document and company reports can change, loan programs vary, and every loan is subject to approval. Nothing here is legal, tax or investment advice.
Hyatt Select Franchise Loan at a Glance
- Franchisor: Hyatt, which places Hyatt Select in its Essentials portfolio of select-service brands
- Segment: upper-midscale, transient (shorter business and leisure stays), aimed at secondary and tertiary markets
- Property size: Hyatt’s February 2025 launch announcement says properties can range from 70 to 200 keys
- Build type: designed for both new-build and conversion projects
- Initial fees: Hyatt’s annual report says franchisees generally pay an initial application fee and/or a design services fee; the brand amounts are in Item 5 of the Franchise Disclosure Document (FDD)
- Royalty: across Hyatt’s franchise agreements, typically 2.75% to 5% of gross rooms revenues, with some agreements structured differently
- Term: Hyatt’s franchise agreements typically run 20 years, with franchisees typically having the option of a 10-year successor agreement
- Growth: Hyatt reported more than 25 Hyatt Select deals signed in 2025 and approximately 50 hotels in the pipeline as of October 2026
- Estimated initial investment and net worth requirements: not verified; see Item 7 of the FDD
- SBA Franchise Directory: listed as Hyatt Select under code S8533, with notes on the Hyatt comfort letter and management agreements
What Is Hyatt Select?
Hyatt announced Hyatt Select in February 2025 as its first conversion-friendly transient brand in the upper-midscale segment in the Americas, starting there before expanding globally. It complements Hyatt’s upper-midscale extended-stay offering and gives the company a transient hotel at a lower price point than its upscale select-service flags.
The concept is deliberately lean. Hyatt describes complimentary hot and cold breakfast designed to need limited equipment, a 24/7 self-serve grab-and-go market run by an outside provider with food, snacks, beer and wine, and modern guest rooms with free high-speed internet and workspaces. Hyatt says the model uses efficient staffing to reduce labor costs while maintaining service quality, and that owners gain access to its reservation system, revenue management tools, centralized commercial services and loyalty program.
Hyatt’s October 2026 development update listed open hotels in Williamsburg, Virginia, and Valdosta, Georgia, and named Hyatt Select as one of the conversion pathways in its Essentials portfolio for qualified hotels.
Why lenders pay attention to the model. A small breakfast setup, an outsourced market and lean staffing aim to lower operating costs, which supports debt service coverage. But the brand is young, so lenders lean on the local market, the property’s history and the owner’s hotel experience.
Hyatt Select Franchise Costs
We could not access the current Hyatt Select FDD, so this article does not quote an investment range. Item 7 of the FDD gives the official estimate and the assumptions behind it, and costs will differ sharply between a conversion and a new build.
Application and design fees. Hyatt’s annual report says franchisees generally pay an initial application fee and/or a design services fee. Item 5 gives the Hyatt Select amounts and refund terms.
Conversion costs. For an existing hotel, the main expense is bringing the building, guest rooms and public areas up to Hyatt Select standards: room refresh or replacement of furniture, signage, breakfast area, the market space and technology integration. The scope depends heavily on the hotel’s age and condition. Our article on conversion franchise financing explains how these projects are typically funded.
Expect the overall budget to include:
- Application and/or design services fee (Item 5)
- Land and construction, or the purchase price or existing value of a hotel to be converted
- Renovation or property improvement work to meet brand standards
- Furniture, fixtures and equipment for guest rooms, the lobby and breakfast area
- Reservation, property management and guest technology
- Pre-opening training, marketing and staffing
- Working capital and reserves through ramp-up
Ongoing Fees and How They Affect Your Loan
Hyatt’s annual report says royalties are typically 2.75% to 5% of gross rooms revenues. Some agreements instead charge a fee based on gross room revenues booked through Hyatt reservation channels, typically 7%, and some use 6% of gross room revenues plus 3% of gross food and beverage revenues. Franchisees also pay for services such as centralized reservations, technology, digital media and national advertising. Item 6 of the Hyatt Select FDD shows the formula that applies.
For a Hyatt Select franchise loan, lenders deduct franchise fees, any management fee and a furniture and equipment reserve before calculating debt service coverage. In smaller markets with modest room rates, those deductions weigh heavily, so show each fee line separately.
Franchisor Requirements for New Owners
Hyatt does not publish fixed net worth or liquidity minimums for Hyatt Select in the materials we reviewed. Its annual report says Hyatt approves the plans for, and the location of, franchised hotels and reviews their operation to maintain standards. For a conversion, expect Hyatt to assess the property’s condition, location and fit with the brand; for a new build, the site, design and development team.
Ways to Own a Hyatt Select
Converting a hotel you own. An owner of an independent or differently branded hotel can apply to convert. Financing often combines a refinance of existing debt with renovation funds. See hotel debt refinancing.
Buying a hotel to convert. An investor may acquire a property with plans to reflag it. Lenders usually want Hyatt’s approval, or clear progress toward it, before closing. Our page on hotel acquisition financing covers purchase structures.
Building new. A ground-up Hyatt Select requires construction financing and a longer runway before revenue. See hotel start-up financing.
Buying an existing Hyatt Select. A future resale requires Hyatt’s approval and may come with an improvement plan.
Financing Options for a Hyatt Select Franchise
SBA 7(a) loans. SBA 7(a) loans can fund acquisition, renovation, franchise fees, equipment and working capital. The 7(a) program maximum is currently $5 million, and program rules can change.
SBA 504 loans. For owner-occupied hotel real estate, construction and major renovations, SBA 504 loans pair a first-position loan with a certified development company loan and a borrower contribution, subject to program rules.
Conventional loans. Conventional business loans are often used for larger acquisitions and construction, including bridge loans that convert to permanent financing once the hotel stabilizes under the new flag.
Property improvement financing. Conversion work is often financed with the acquisition or refinance. Our article on hotel PIP financing explains how owners pay for brand-required work.
Equipment financing. Guest room furniture, breakfast equipment, laundry equipment, fitness equipment and technology may be financed separately, though the primary lender will count that debt.
Working capital. Renovation disruption and new-hotel ramp-up both strain cash; a line of credit can carry payroll and fixed costs. See hotel working capital.
Seller financing. When buying a hotel to convert, a seller may agree to carry part of the price. Any seller note would typically be subordinate to the senior loan, and SBA programs may limit how it is structured.
SBA Loans for Hyatt Select Franchisees
SBA-backed loans are made by participating lenders with an SBA guarantee on part of the loan. The SBA Franchise Directory helps lenders confirm that a franchise relationship is eligible.
The listing. Hyatt Select appears on the SBA Franchise Directory under code S8533. A listing does not approve any borrower or guarantee a loan.
The comfort letter note. The directory states that the Hyatt Comfort Letter has been approved by the SBA. A comfort letter between franchisor and lender typically covers notice of defaults and the lender’s ability to keep the hotel operating under the flag if problems arise. Because the form is already approved, lenders do not need a separate SBA review of it.
The management agreement note. If the applicant also uses a third-party management company, the lender or certified development company must review the management agreement under SBA rules to decide whether the applicant and manager are affiliated. The applicant is not eligible if the management company is, or is affiliated with, the franchisor, and the SBA has not reviewed any Hyatt management documents. In plain terms, an owner-operated Hyatt Select or one run by an independent manager may qualify, but one managed by Hyatt would not.
Application tips. Settle management early, share the full management agreement and request the comfort letter once the franchise agreement is signed. Our SBA loan calculator can help with early payment estimates; results are for planning only.
How Lenders Evaluate a Hyatt Select Deal
Personal credit and financial history. Expect a review of credit, tax returns and a personal financial statement, plus personal guarantees.
Net worth and liquidity. Show cash for the equity injection plus reserves for cost overruns.
Hotel experience. Prior hotel ownership or a capable management company carries significant weight, especially for a newer brand.
Business plan and projections. Projections should reflect the market’s demand drivers, realistic rates for an upper-midscale transient hotel, the lean staffing model, the breakfast cost and each franchise fee line.
The FDD and franchise agreement. Lenders review the term, successor rights, transfer and termination provisions, the improvement obligations and the comfort letter. Item 10 shows whether Hyatt offers any financing, and Item 19 shows whether the FDD includes financial performance representations.
The property. For a conversion, lenders want an appraisal, a property condition report and the brand’s required work list. For a new build, they want the site, plans, contractor and budget.
Historical results for existing hotels. A conversion candidate’s past occupancy, rate and profit and loss statements show what the hotel can do before the new brand’s fees are applied.
Multi-Unit Growth and Development
Hyatt Select’s focus on smaller markets suits owners who hold several hotels across a region, converting properties in sequence to spread renovation work over time. Lenders typically finance each hotel separately and look at the combined portfolio’s cash flow as the owner adds properties. Our article on multi-unit franchise financing explains how growth capital is structured.
Real-World Scenarios
An owner reflagging an aging independent. A family owns an independent hotel near a highway interchange in a secondary market. They apply to convert to Hyatt Select, refinance existing debt and fold renovation costs into one SBA 7(a) loan, keeping a working capital line for the renovation period.
An investor buying to convert. An investor purchases a hotel under another flag at the end of its franchise term. The lender closes after Hyatt approves the conversion, with the improvement budget funded at closing.
A developer building new. A hotel developer with prior projects builds a Hyatt Select in a growing tertiary market using an SBA 504 structure for the real estate and equipment financing for furniture and fixtures.
Common Mistakes to Avoid
- Underestimating conversion work on an older building
- Assuming SBA eligibility before reviewing the management agreement
- Modeling only the royalty and ignoring other franchise fees
- Closing on a purchase before Hyatt approves the conversion
- Leaving too little working capital for the renovation and ramp-up period
- Relying on brand-wide results instead of local market data
For more pitfalls, see the most common hotel loan mistakes.
Next Steps to Finance Your Hyatt Select Franchise
Step 1: Confirm the property and market fit. Talk with Hyatt’s development team about whether your site or hotel suits the brand.
Step 2: Review the FDD. Study Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 3: Define the scope. Get a conversion work list or construction budget and a realistic timeline.
Step 4: Choose management. Decide whether you will self-manage or hire an independent manager, keeping the SBA management note in mind.
Step 5: Build projections. Model occupancy, rate, staffing, breakfast and every fee line for the first several years.
Step 6: Talk with a financing specialist. Compare SBA 7(a), SBA 504 and conventional options before signing commitments.
Step 7: Close. Align Hyatt’s approval, the comfort letter and closing.
Hyatt Select Franchise Loan FAQs
How much does a Hyatt Select franchise cost?
We could not verify the Item 7 range. Total cost depends on whether you convert an existing hotel or build new, the property’s size within the 70 to 200 key range and local construction or acquisition prices. Item 7 of the current FDD gives the official estimate.
What is the Hyatt Select franchise fee?
Hyatt’s annual report says franchisees generally pay an initial application fee and/or a design services fee. The Hyatt Select amounts are in Item 5 of the FDD.
What royalty does Hyatt charge?
Across its franchise agreements, Hyatt says royalties are typically 2.75% to 5% of gross rooms revenues, with some agreements using different structures. Check Item 6 for Hyatt Select.
Can I convert my existing hotel to Hyatt Select?
Hyatt designed the brand for both conversions and new builds and lists it as a conversion pathway for qualified hotels. Approval depends on the property, location and condition.
Is Hyatt Select eligible for SBA loans?
Yes, it is on the SBA Franchise Directory under code S8533. The listing notes an SBA-approved Hyatt Comfort Letter and requires a lender review of any third-party management agreement; hotels managed by Hyatt are not eligible.
How much net worth or liquidity do I need?
Hyatt does not publish minimums for Hyatt Select in the materials we reviewed. Lenders will expect enough liquidity for the equity contribution and reserves.
Does Hyatt offer financing for Hyatt Select?
Item 10 of the FDD discloses whether Hyatt or an affiliate offers financing. Most owners use outside SBA or conventional loans.
How long is the franchise term?
Hyatt’s annual report says its franchise agreements typically run 20 years, with franchisees typically having the option of a 10-year successor agreement. Item 17 has the Hyatt Select terms.
Can a first-time hotel owner get a Hyatt Select franchise loan?
It is possible, but lenders and Hyatt will look closely at experience. An experienced independent management company can strengthen the request.
Can I finance furniture and equipment separately?
Often, yes. Guest room furniture and technology can be financed on their own, though lenders count that debt.
Final Thoughts
Hyatt Select gives owners in smaller markets a way to join a major loyalty system with a lean, conversion-friendly model. A strong Hyatt Select franchise loan request starts with an honest look at the property, a detailed scope of work and projections that account for every fee, then matches the deal to SBA or conventional financing.
US Professional Funding helps hotel owners and franchise buyers finance acquisitions, conversions, construction, equipment and working capital. Learn more about our franchise financing and hotel and motel financing solutions.
