Hotel foreclosures in California more than quadrupled last year as business travelers and vacationers cut spending and commercial real estate values plunged, forcing owners into default.
There were 62 foreclosures on hotels in the state last year, compared with 15 in 2008, Irvine, California-based Atlas Hospitality Group said in a statement. Properties in default jumped almost six-fold to 307.
Lodging owners are struggling to make debt payments after adding rooms and properties from 2004 to 2007, when financing was easy to come by because banks bundled the loans into mortgage-backed securities and sold them to investors.
About 1,200 loans totaling $28.2 billion and backed by 1,800 U.S. hotels were included on a performance watch-list by Realpoint LLC as of the end of December. The list includes loans in default or at risk of default, according to the Horsham, Pennsylvania-based credit-rating company.
Occupancy in the top 25 U.S. travel markets fell to 61 percent through November from 67 percent a year earlier, according to Smith Travel Research in Hendersonville, Tennessee. Average daily rates slumped 12 percent during that period compared to the prior year and will likely drop 3.4 percent in the U.S. in 2010, according to Smith Travel.