Times Square hotels are headed to bankruptcy. Investors are clawing at distressed hotels in Chicago. High interest rates are making it harder for investors to transact. And in California, more supply is coming offline, as developers look to hotels for adaptive reuse projects.
And what does this all mean for the future of the hotel market?
“On the new development side, these hotels, when they get finished, it could be a little bit of a cloud on the horizon, because they have to refinance construction loans,” said Alan Reay, the president of hotel brokerage Atlas Hospitality Group.
On the latest episode of TRD’s podcast Deconstruct, Reay discussed how his clients are seeing distress start to crop up across New York and Chicago, especially hotels designed for business travel.
“It mirrors what’s happening in the office market,” Reay said. “Until you have people in the downtown areas, until you can attract business meetings and conventions, the city center hotels will really lag behind.”
Reay also noted the hotel segments that are faring well and are attracting investors — in particular, luxury hotels in coastal areas. In November, billionaire Tilman Fertitta bought the Montage Laguna Beach for $641 million, or about $2.47 million per room, setting a California record.
Tune into the full episode now on Apple, Spotify or wherever else you listen to podcasts.
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