We've dealt with variations on this issue over the last decade. When we first started out, my wife was uncomfortable with the idea of me being in the same room, watching and jacking off. We found a couple of compromises. One was related to the layout of a hotel we like, which are suite, or "condo style" units - they have a bedroom with a glass sliding door that opens out onto a privacy-fenced patio. Depending on the weather, and other factors, it allowed me to sit on the patio comfortably, watch, and stroke while my wife and her encounter partner were in bed. Sometimes I opened the door, most times it stayed close, so the sounds of her moans didn't travel. The drawbacks were the lack of an up-close view of the action.
Another hotel based variation was the use of certain two-story suites, which had a loft area upstairs - I could watch and stroke from the upstairs area, while my wife and her partner remained downstairs, in the sitting area, fucking and sucking on the love-seat, floor, etc. Again, the drawback of no up-close view.
Eventually she got past the self-conscious aspect - which it turns out was mostly related to insecurity over how I might react to watching her intimately kiss a strange partner, or similar "too intimate" actions.
On occasion, we've had an encounter partner who couldn't get hard in the presence of another male. We use a technique where I depart, until she gets her sex partner fully aroused, and then things are generally fine.