Hotel industry warns of ‘unprecedented’ surge in coronavirus-related foreclosures
Industry leaders are asking Congress for financial help
Dream Hotel Group CEO Jay Stein outlines how his hotels fared during coronavirus lockdowns and what procedures they've implemented in order to adhere to CDC guidelines.
The hotel industry, one of the hardest hit by the coronavirus pandemic, is facing historic mortgage payment challenges – and is asking Congress to set up a federally backed source of relief.
The percentage of hotel loans in the commercial mortgage-backed securities market at least 30 days delinquent as of July was 23.4 percent, which is the highest percentage on record, according to a report from Trepp. During the same period last year, the number of loans 30-plus days delinquent was just 1.34 percent.
While about $13.5 billion worth of loans were delinquent during the financial crisis, the 23.4 percent figure represents $20.6 billion in hotel loans.
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On Tuesday, industry groups wrote a letter to Congress asking for commercial debt relief, especially since many commercial mortgage-backed securities loan borrowers have been unable to obtain forbearance plans from servicers.
“Without action, an unprecedented wave of hotel foreclosures will ripple out from the commercial real estate market causing permanent job losses for thousands and the loss of billions in tax revenue to local municipalities supported by hotels,” the groups wrote in the letter.
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As a means to help the situation, groups are asking Congress to pass the HOPE Act, which would provide relief to small businesses in the commercial real estate market. The bipartisan legislation would create a federal funding source to help business owners keep up with mortgage payments.
Throughout the coronavirus pandemic, the accommodation industry has taken a tremendous hit as a result of lockdown and social distancing measures that have largely kept people at home and not taking planned trips.