IRVINE, Calif., July 14, 2010 – Atlas Hospitality Group has just released its 2nd Quarter 2010 Distressed California Hotel Survey. The survey found that the number of hotels in default or foreclosed on continued to escalate through the second quarter.
2nd Quarter 2010 survey highlights include:
• 478 California hotels are in default or have been foreclosed on, an 18% increase from the 1st quarter 2010 and 132% over the 2nd quarter of 2009.
• The number of foreclosed hotels increased 27% from the 1st quarter, 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 the 1st quarter 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.
• Of the 100 hotels that had been foreclosed on, only 12 (12%) had been resold to new investors.
The California hotel market continued to experience a high level of distress as the pace of defaults and foreclosures continued to accelerate through the 2nd quarter.
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 2nd 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.