Luxury Hotel Properties Face Foreclosure in Poor Economy
Wednesday, July 29th, 2009
The tough economic times haven't only affected employment rates and the housing market. Recent statistics show that many luxury hotel and resort properties are now facing foreclosure because they cannot keep up with their monthly loan payments and are struggling to attract fresh business. CNN Money reports that many hoteliers and resort owners are slashing overnight rates by as much as 12% in 2009 in hopes of recovering costs and stimulating business.High-end hoteliers are finding it difficult to keep up with loan payments for their multi-million dollar properties, and some are defaulting on loans that are as high as $100 million. Although defaults do not always result in foreclosure, they are a key indicator that the owner is having trouble keeping up with payments and may soon be considering a sale or bankruptcy.
In some situations, the terms of the loan can be renegotiated so that the owner can retain ownership of their property, but in other cases, the default is a signal that the future of the property looks bleak.
The hotel and travel industry has experienced a significant slowdown since the end of 2008 as the economy dipped into a recession. Luxury vacations are no longer at the top of the priority list for many travelers, and even lower room rates, free upgrades and discounts on future stays are not enough to attract more business. People are still traveling for business and for 'essential travel purposes' such as emergency family situations, and are taking more affordable trips across the state, or simply enjoying a 'staycation' in their home town to save on costs.
As occupancy rates continue to drop, hotels and resorts will continue to reduce prices and offer some of the biggest discounts to date. Consumers who are still interested in traveling can take advantage of these deep discounts even during peak season at some of the major properties.
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