More Hotels Struggle to Avoid Bank Foreclosure Listings

by on Foreclosure Help

It seems that the year 2009 will end worst for the commercial real estate market as more and more hotels are struggling to avoid being placed on bank foreclosure listings. Commercial properties across the country are following the path treaded by many foreclosed residential properties.

Hotels continued to struggle as travelers reduce their discretionary spending, resulting to sharp decline in hotel revenues. And to make matters worse, hotel values dropped so drastically that a growing number of properties are at risk of foreclosure as owners failed to meet their mortgage payments.

In San Diego, California, the number of hotels facing foreclosure threat increased almost four times in the first eight months of this year. And industry analysts are predicting that more hotels will face the bank foreclosure listings before the year ends.

The current trend is benefiting bargain-hunting travelers who will encounter many room rate discounts as a way for hotels to entice more customers in order to survive the current market battered by the economic downturn and high unemployment.

Some local hoteliers are concerned that with many hotel owners walking away from their properties, they will be left competing with hotels owned by lenders who will sold the properties way below the market value.

Industry experts are expecting a very stiff competition among people who want to buy cheap hotels and then operate them at cutthroat rates. This will greatly affect hotel owners who are charging at full price. However, they believe that the market is nearing its bottom and will see some strong improvement in terms of demand by third quarter next year.

Recent market data showed a drastic increase in the number of delinquent hotels, from 6 in January to 26 last month. Meanwhile, hotels that went into foreclosures jumped two times from 2 to 4. These foreclosed hotels include the El Camino Motel, Harbor House, Pacific Coast Inn and Suites and Mount Woodson Golf Resort.

Some of the delinquent hotel properties included the Extended Stay America, Mission Plaza Hotel and Suites and Homestead Studio Suites.

Industry experts predicted that more hotels will go into foreclosures which would result in spiraling prices and more bargains for consumers.

So far, statewide data showed that 260 hotel owners were in default while 47 were on bank foreclosure listings.