Interesting reading, in particular when considering the blown out of proportion "lifestyle" area around Loscabos. We all see how the recession did affect that area and the people living and working there. (Yeah, the editor does know: we just see things NOT the right way and without having a vision..... sure...!!) Luxury hotels with $1,000-a-night room rates and extravagant resorts may face a tougher recovery than the rest of the industry. "The most over-the-top excesses will probably be a long time -- if ever-- coming back," Marriott President Arne Sorenson told the Reuters Travel and Leisure Summit. He drew a distinction between these hotels and the typical Ritz-Carlton luxury hotels the company operates. Marriott's other brands include its namesake properties and Courtyards. Sorenson added that some projects in the Caribbean, which tend to be smaller and partly rely on residences, "may never come back" because they rely on the kind of lavish spending that has gone out of vogue with travelers. "They require really that conspicuous consumption to support their entire business model," Sorenson told reporters in a telephone interview. Of all hotels, luxury properties were the hardest hit last year. While rates sank nearly 9 percent for the U.S. hotel industry, luxury hotels saw their rates tumble more than 16 percent, according to PricewaterhouseCoopers.
Many hotels across the spectrum have buckled under their debt loads in this downturn, as lower room rates constrain cash flow used to service these payments. The Renaissance Mayflower Hotel indicated last year that it would no longer be able to meet debt service, Fitch Ratings said last month.
Ritz-Carlton Hotel Co, a division of Marriott, will close its Lake Las Vegas property this year. Some distressed properties have bristled against standards set by companies like Marriott. Sorenson said the company is working with some hotels to manage their payments, and has extended the deadline for hotels to put flat-screen television sets in rooms.
"We've also got some one-off owners who just don't have two nickels to rub together," Sorenson said. "If it goes too long or if it is too severe, that is a place where the response is really to pull the flag." Chief Financial Officer Carl Berquist and Sorenson said typically 5,000 rooms leave the Marriott system each year, but this year a few thousand more rooms could be shown the door.
These properties would largely fall in the limited-service category in tertiary markets. In the event that a hotel goes into foreclosure, Marriott has "non-disturbance agreements" on many hotels, which prevents that hotel from leaving its brand, Berquist said.
Widespread distress in the hotel industry, lower rates and tough economic conditions do not mean all luxury hotels will go belly-up, Sorenson said. Some of these hotels will be able to restructure their debt with their lenders. "There's a whole bunch of hotels that are in established destinations, dealing with meaningfully lower rates," Sorenson said. "Over the next number of years (these hotels) are going to see their owners work with their lenders."
Interesting reading for one living at Baja Sur with all of it's Baja luxury.... Read that and the next post and then go back to our post last year about the 'W" of double-dip and build yourself a opinion....
Many hotels across the spectrum have buckled under their debt loads in this downturn, as lower room rates constrain cash flow used to service these payments. The Renaissance Mayflower Hotel indicated last year that it would no longer be able to meet debt service, Fitch Ratings said last month.
Ritz-Carlton Hotel Co, a division of Marriott, will close its Lake Las Vegas property this year. Some distressed properties have bristled against standards set by companies like Marriott. Sorenson said the company is working with some hotels to manage their payments, and has extended the deadline for hotels to put flat-screen television sets in rooms.
"We've also got some one-off owners who just don't have two nickels to rub together," Sorenson said. "If it goes too long or if it is too severe, that is a place where the response is really to pull the flag." Chief Financial Officer Carl Berquist and Sorenson said typically 5,000 rooms leave the Marriott system each year, but this year a few thousand more rooms could be shown the door.
These properties would largely fall in the limited-service category in tertiary markets. In the event that a hotel goes into foreclosure, Marriott has "non-disturbance agreements" on many hotels, which prevents that hotel from leaving its brand, Berquist said.
Widespread distress in the hotel industry, lower rates and tough economic conditions do not mean all luxury hotels will go belly-up, Sorenson said. Some of these hotels will be able to restructure their debt with their lenders. "There's a whole bunch of hotels that are in established destinations, dealing with meaningfully lower rates," Sorenson said. "Over the next number of years (these hotels) are going to see their owners work with their lenders."
Interesting reading for one living at Baja Sur with all of it's Baja luxury.... Read that and the next post and then go back to our post last year about the 'W" of double-dip and build yourself a opinion....
