Rise in US hotel closures signals healthy market

TRD New York /
Jan.January 06, 2014 06:20 PM

Hotel closures are on the rise nationwide, but experts say the trend is a sign of strengthening deals and an increasingly healthy economy.

Investors are increasingly letting go of properties that don’t perform, opting to sever ties rather than step in to salvage laggards. Hotel closures increased by 12 percent in 2013, according to a report from hospitality data firm STR Analytics. Nationwide, a total of 120 hotels have permanently shuttered, an uptick from 107 closings in 2012.

“During the recession, the brands in some respects looked the other way on certain property improvement requirements not being met … [but] brands are no longer tolerant of those hotels that consistently have low scores from consumers,” Suzanne Amaducci-Adams, head of law firm Bilzin Sumberg Baena Price & Axelrod LLP’s hospitality group, told Law360.

Major hotel brands shed the bottom 5 to 10 percent of their portfolios every year, Amaducci-Adams added, noting that some of the uptick could also be attributed to a regular cycle.

While the shuttered hotels varied in terms of location, with some in New York City and others in quieter markets such as Bettendorf, Iowa, many were not linked to prominent brands and were built in the 1960s and ’70s, according to STR data cited by Law360.

And the closures do not indicate a dwindling supply, experts told Law360, pointing to the booming development of new hotels catering to a strong demand. [Law360]Julie Strickland


Related Articles

arrow_forward_ios
The construction, retail and restaurant sectors led May’s surprising jobs rebound, while the hotel industry continued to suffer. (Getty, iStock)

Construction, retail, restaurants lead May jobs rebound

Construction, retail, restaurants lead May jobs rebound
The Hotel Indigo Lower East Side at 171 Ludlow Street and Rotem Rosen (Credit: Hotel Indigo)

Tallying crisis’ toll on MRR Development’s Hotel Indigo

Tallying crisis’ toll on MRR Development’s Hotel Indigo
Selina CEO Rafael Museri (Credit: The Vollman Group)

Selina CEO says $60M in funding will get startup through crisis

Selina CEO says $60M in funding will get startup through crisis
Rotem Rosen with the Hotel Indigo Lower East Side at 171 Ludlow Street, and Alex Sapir with the NoMo Soho hotel at 9 Crosby Street (Credit: Google Maps)

Sapir gets PPP loan for NYC hotel; Rotem Rosen to return his

Sapir gets PPP loan for NYC hotel; Rotem Rosen to return his
Clockwise from top left: John Tolbert, Philip Goldfarb, Dev Motwani, José Cil and Ken Stiles

Developers, resort owners push for Florida reopening plan

Developers, resort owners push for Florida reopening plan
Courtyard by Marriott Boston Downtown. Homewood Suites Chicago and Sheraton San Jose Hotel (Credit: Google Maps)

Hotel CMBS loans worth $2B fall into special servicing

Hotel CMBS loans worth $2B fall into special servicing
The Hotel Indigo Lower East Side at 171 Ludlow Street and Rotem Rosen (Credit: Google Maps)

Rotem Rosen lands SBA loan on Hotel Indigo to keep lights on

Rotem Rosen lands SBA loan on Hotel Indigo to keep lights on
Missed loan payments will approach Great Recession highs, a new report finds (Credit: iStock, Getty Images)

Missed loan payments to approach Great Recession levels: Fitch

Missed loan payments to approach Great Recession levels: Fitch
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...