While airlines are center stage as they wage a battle for more federal aid to avoid layoffs in 10 days, lodging is in equally dire straits, experts say.
In a startling report from the Los Angeles Times, industry experts warn that massive hotel closures are afoot.
“We know there is a tsunami outside. We know it’s going to hit the beach. We just don’t know when,” said Donald Wise, a commercial real estate expert and co-founder and senior managing director at Turnbull Capital Group.
The Times noted that a steep decline in tourism and business travel, coupled with an unusually high loan delinquency rate among hotel borrowers, have been the triggers to the downfall.
“We anticipate many hotels won’t survive,” said Heather Rozman, executive director of the Hotel Assn. of Los Angeles. “Industry data shows 1 in 4 properties already are struggling to pay mortgages, risking foreclosure.”
One of those struggling hotels has finally succumbed – the upscale Luxe Rodeo Drive Hotel in Beverly Hills has shut down, citing the financial effects of the pandemic. The 86-room boutique hotel is on the same street as jewelers Cartier and Harry Winston, arguably one of the most expensive pieces of real estate in the world.
“Please accept my sincerest gratitude for your service and loyalty and know that this decision was not made lightly,” Efrem Harkham, the chief executive of Luxe Hotels, told workers in a letter.
And it’s not just Los Angeles.
Earlier this month, the Hilton Times Square hotel in New York City – another property on expensive ground, the so-called crossroads of the world – went out of business.
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