Rising LeverageHigher leverage raises refinancing and interest-rate risk for a hospitality firm with seasonal cash flows. Over months this constrains strategic choices, increases fixed financing costs, and elevates the probability that weaker operating periods will stress covenants or force asset sales.
Negative Free Cash FlowPersistent negative free cash flow is a structural concern in a capital-heavy hotel business: it limits ability to fund maintenance capex, repay or refinance debt, and restricts dividend or share buyback optionality. Reliance on external funding raises execution risk.
Fluctuating And Declining MarginsVolatile and declining margins point to operational inefficiencies or limited pricing power. In hospitality this reduces ability to build reserves against slow periods, undermines return on equity, and makes sustained profitability sensitive to cost pressure and demand shifts.