Nineteen California hotels were foreclosed upon in the fourth quarter, bringing the total for the year to 138, according to Atlas Hospitality Group's 2010 Year-End Distressed California Hotel Survey. The number of hotels in default fell during the quarter, which was mainly due to the Extended Stay of America restructure, which involved 109 California hotels.
The number of hotel rooms that have been foreclosed on was at 10,144 – up 9.8% from the third quarter and up 127% since the beginning of the year. The largest hotel in the state to be foreclosed on last year was the 512-room Holiday Inn in San Jose.
Atlas forecasts that hotel defaults and foreclosures will grow in the first half of the year before leveling off.
‘This is due to the fact that the economy is improving and [revenue per available room continues] to increase,’ Atlas says. ‘In addition, for those hotels that have survived this downturn, they are now more likely to escape the default process as they regain profitability.’
A looming problem for many hotel owners, Atlas adds, is that many loans are maturing in the next two years, which could lead to issues with finding new funding for refinancing.
SOURCE: Atlas Hospitality Group
