Categorized | Commercial

Increase in Hotel Foreclosures Anticipated

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The hotel real estate market was one of the first to recover from the real estate crash in the United States, as tourism and business travel prompted growth. However, many analysts now believe that the hotel market may face a huge decline again next year, as foreclosures are expected to rise substantially.

A significant number of hotels in the United States have their debts coming due in 2012, and with banks limiting the amount of financing that is readily available, many analysts believe that a large number of hotel properties will face foreclosure. The massive increase of hotel foreclosures could be a detrimental blow to the commercial real estate market. The market has already suffered terribly over the past year, and with the hotel sector’s outlook being grim, things do not look any better for 2012.

While prime markets such as New York City, Boston, and San Francisco have all performed strongly over the past few years, the hotel sector of secondary markets has somewhat struggled in comparison. Despite their struggles, however, the overall hotel booking numbers have increased. Although booking numbers are fairly strong on average, the lack of potential financing worries industry leaders and analysts. Without financing, many hotels will have to go into foreclosure, as there will be no other alternative.

The pending threat of hotel foreclosures has also impacted the hotel construction market. Developers have seen new construction orders come to a halt, as investors eagerly await the opportunity to buy foreclosed hotels are bottom level prices.

New York City has been one of the few cities that have seen strong growth in the construction of new hotels. In fact, its planned construction numbers are three times that of the next strongest hotel construction market.

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About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

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