Proactive Strategies For Distressed Hotels

The U.S. hotel industry continues to stage its recovery from the decimation caused by theCOVID-19 pandemic. While there is optimism that this recovery will continue in 2023 as business and group travel resume, there are strong economic headwinds that threaten assets across the country. With inflationary factors, sharply rising interest rates and persistent staffing shortages leading to significantly increased operating costs, there is widespread concern that rising costs will outpace revenues gains in 2023.

Although previous predictions of a wave of foreclosures due to the pandemic have been largely avoided, indications are that the current macroeconomic conditions are pushing some distressed hotel properties to the point of no return. In this article, we discuss some of the steps that the key stakeholders—hotel owners, operators, and lenders, should consider in evaluating how to deal with distressed hotel assets.