Posted on 06/06/2023 12:26:34 PM PDT by EBH
Tighter lending standards from regional banks are making it harder for U.S. hotel developers to secure funding, slowing construction of new hotels at a time Americans' appetite for travel is ripe.
Hotel developers, private equity firms, and general contractors told Reuters the financial stress on regional banks -- the largest lenders to hotels and other commercial real estate markets -- has forced developers to postpone projects or find other creative ways to raise capital.
The hotel industry's predicament highlights the impact on the broader U.S. economy of the regional banking crisis, which resulted in the failure of three mid-sized U.S. lenders and prompted a flight in deposits to larger banks.
Following the collapse of Silicon Valley Bank in March, California developer Shopoff Realty Investments paused construction of Dream Las Vegas, a 21-story hotel and casino resort, and said the firm was trying to secure more financing.
Fifty-nine of the 98 total U.S. hotel projects that have been paused this year were put on hold since March, when the banking crisis started, according to previously unreported data shared with Reuters by Build Central Inc., a subscription-based research and analytics firm used by some large hotel brands to gauge market opportunities by location. A total of 324 projects broke ground or are in the pre-construction phase so far this year.
"The regional banks that used to be active for us 9 to 12 months ago are not showing up to finance hotels for us today," said MCR Hotels Chief Investment Officer Joseph Delli Santi, the third-largest U.S. owner-operator of hotel brands including Hilton.
(Excerpt) Read more at reuters.com ...
With the rate that Hotels are being used to house illegals and subsidized by the Gov. You’d think they be falling all over themselves to lend money.
This…
Virginia-based REIT Park Hotels & Resorts has opted to cease payments on a $725 million loan (50% equity or what?)
Owner of SF’s Largest Hotel, the Hilton Union Square, Is Walking Away, Surrendering It to Lender.
so were we going to put the aliens?
Women and children ..hardest hit. (Tax payers will be ok)
on topic ....
Home loans are getting tougher also.
A little more scrutiny and tighter appraisals.
can you say sloooooooow down?
I knew you could.
As I predicted in March 2020.
This is just starting. It’s going to make the 2008 meltdown look like a blip.
The mob is prepared to lend these folks all the money they need.
But—no bailout if they don’t pay—the mob takes repayment in the form of body parts!
I’ve heard that hotels are not considered such a good investment.
In San Francisco, tourism has greatly declined, first from Covid restrictions, and now because the environment in S.F. is repulsive to visitors. Business conventions as well as leisure travel to S.F. has noticeably declined.
I’m sure that the “balance sheet” of a hotel, will show bad cash flow nowadays, as tourism in S.F. had been a big part of the economy. It’s hard to believe now, but many business conventions and meetings have wanted to go to S.F. in the past.
So, if the hotel has bad occupancy and not making enough to pay the loans, and the asset value of the hotel has declined as a going concern business, add it all up, and this hotel owner decided to just walk away.
Well, there are thousands of office buildings that are vacant since no one is coming back to work in offices after covid. We are looking at a financial disaster as corporations fail to renew leases on empty office space.
They can convert those into hotels.
Hotels have very low profit margin—usually the real estate is the best part of the investment/business.
If you got a good look at the financing of a lot of hospitality properties, you would see that a lot of them were overfinanced.
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