Payments Past Due for Several Hotel Owners

dec-1-payments-past-due-for-several-hotel-ownersThe current state of the global economy is not only affecting homeowners, but also lately more and more hotel owners are beginning to feel the sting of deep debt. Hotel owners have been scrambling all year to find new and exciting ways to keep travellers coming to visit. Many hotels have begun offering in-house spa credits, restaurant credits, fifty percent discounts on five-star guest rooms and even additional free nights.

Even with all that effort, occupancy still fell on average about ten percent. Without guests, the hotel owners are not able to acquire the capital they need to make mortgage payment. Hotel loans are quickly falling into serious delinquency. In fact, hotel loans are becoming delinquent faster than any other type of commercial property debt.

As defaults continue to rise, the picture becomes grim for the hospitality industry, which is now seeing more rooms than guests, and more hotels and resorts are popping up all around the world every day. This is most definitely a problem that we could see get worse before we see any improvements. The demand is not expected to get stronger any time soon and the many new projects that were planned prior to the great meltdown only make matters worse.

The good news for travellers is that with the oversupply situation not improving any time soon, rooms rates are expected to remain low for at least another year or so. However, this news is not so great for the owners of the hotels and resorts or for the banks that lent these people the money they needed to purchase or build their businesses.

The increase in hotel loan delinquencies is quite incredible. Five times the number of hotel owners are behind on their payments in 2009 that they were last year, according to Trepp LLC. Trepp LLC is a mortgage data firm that tracks investor trading. According to the reports, in October, as many as 8.7 percent of home loans were in distress, which is quite substantial compared to the 1.5 percent that it was last year. That is close to double the rate for commercial property and stores.

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