IRVINE, Calif., January 21, 2010 – Atlas Hospitality Group has just released its 2010 Year-End Distressed California Hotel Survey. The survey found that the number of hotel foreclosed on continues to increase while hotels in default fell. The drop in defaults was due mainly to the Extended Stay of America restructure, which involved 109 California hotels.
View real-estate owned hotels by county and room count.
4th Quarter 2010 survey highlights include:
• 465 California hotels are in default or have been foreclosed on.
• The number of foreclosed hotels increased 15.9% from the 3rd quarter, from 119 to 138, and up 122% since the beginning of the year.
• The number of hotel rooms that have been foreclosed on was at 10,144, up 9.8% from the 3rd quarter and up 127% since the beginning of the year.
• The largest hotel in the state to be foreclosed on in 2010 was the 512-room Holiday Inn in San Jose.
• Independent hotels accounted for 71% of the hotels foreclosed on.
• San Bernardino County led the state in the number of foreclosed hotels with 17, followed by San Diego County with 16 and Riverside County with 14.
• Los Angeles County led in the number of defaulted hotels with 35, followed by Riverside County with 32 and San Diego County with 31.
As we predicted at the beginning of 2010, the number of hotels in default and foreclosed would increased dramatically throughout the year.
In the fourth quarter we saw a decrease of 12.1% of the hotels in default; however, if we exclude the Extended Stay of America hotels, we actually saw an increase of 8.6% over the 3rd quarter.
We are predicting that the number of hotels in default and foreclosure will continue to increase through the first half of 2011 and then we will start to see a leveling off. This is due to the fact that the economy is improving and RevPAR’s continue to increase. In addition, for those hotels that have survived this downturn, they are now more likely to escape the default process as they regain profitability. The one issue that is still looming for many hotel owners is the fact that a number of loans are maturing in 2011 – 2013 and so there could still be issues with finding new funding for refinancing.