Distressed CA Hotels Up in Q2: Survey

Written by Kbryant Tuesday, 20 July 2010 20:58

Hotel Business

07/15/10

Distressed CA Hotels Up in Q2: Survey

IRVINE, CA—In a Q2 survey on distressed California hotels, Atlas Hospitality Group found the number of hotels in default or foreclosure continued to escalate.

The survey showed:

•         478 California hotels are in default or have been foreclosed on, an 18% increase from Q1 2010 and

132% over Q2 2009;

•         The number of foreclosed hotels increased 27% from the Q1, from 79 to 100;

•         The total number of hotel rooms foreclosed on was at 7,560, up 255% from the same period in 2009;

•         The largest hotel to be foreclosed on was the 512-room Holiday Inn in San Jose;

•         78% of the hotels foreclosed on were independent properties, down from 90% in Q1 2010;

•         Riverside County led in the number of foreclosed hotels with 11, 11% of the total. San Bernardino County

followed with nine and Los Angeles County had eight; and

•         Of the 100 hotels that had been foreclosed on, only 12 (12%) had been resold to new investors.

According to Alan Reay, president of Atlas, "A lot of recent industry news has spotlighted the turnaround in occupancy and average daily rate and there is certainly a much more positive attitude in the minds of investors. However, as we can see from the results of the second-quarter survey, there is still a lot of pain in the market. We estimate that the true number of distressed California hotels is much higher, with over 1,000 properties operating under some form of forbearance agreement."