Problems with government authorities concerning development policies, failure to implement safety repairs, failure to pay taxes and allegations of fraud are among the problems that intensified the financial problems of these hotels.
The 253-room 10-story Springdale Hotel and Conference Center in Springfield, Ohio was foreclosed upon by Broadway Bank after hotel operator Shubh Hotels defaulted on its $16 million loan. Additionally, the bank claimed that Shubh used fake invoices to show it spent $10 million to renovate the hotel, which it never did.
Guests of the hotel declined in number through the years as Shubh failed to repair damages arising from water damage and molds – problems also prevalent in abandoned federal homes. The hotel then closed in 2008 after failing to pay taxes and contractors, according to Springdale City economic development director Jeff Tulloch.
A lawsuit filed by former hotel owner Nalini Hospitality Group in April 2009 showed that Shubh still owed $2.24 million. Lawsuits filed by AAA Emergency Services and by a former housekeeping director are also still pending.
Among the bank foreclosed hotels in Dallas is the 400-room Four Seasons Resort and Club Dallas, one of the most exclusive hotels in the city, sitting on 400 acres of land with a spa and a golf club. It hosts the annual golf tournament HP Byron Nelson Championship.
U.S. Bank foreclosed on the hotel to seek payment of the $183 million owed and has set a forced sale in February, but hotel owner BentleyForbes insisted it has been negotiating with the bank since it defaulted on a scheduled payment last year.
The hotel owner also said that it has spent $60 million to improve the hotel after buying it in 2006. According to industry observers, the foreclosure action on Four Seasons was the largest foreclosure posting in North Texas in over two decades.
In Las Vegas, the Artisan Hotel has been foreclosed upon and repossessed by The Siegel Group Nevada after it acquired the deed on the property from the original lender. The Artisan is one of the few boutique hotels in Las Vegas that has cultivated a loyal following because of its superior service, intimate atmosphere and eclectic design.
According to investment analysts, bank foreclosed hotels and other distressed commercial properties continue to rise in number largely because of the slowdown in tourism and business travel, causing property owners to default on loans and make needed repairs.