- When pandemic hit in spring, many hotels transformed rooms into housing for doctors and nurses
- When doctors and nurses checked out, hotels became office suites
- Hotels reinventing properties as schools, emergency housing, homeless shelters, micro-apartments, etc.
Hotels are among the worst suffering commercial properties due to the COVID pandemic. No hotel guests, no business travel and no international tourism equal no income.
Hotel properties all over the country are faced with this dilemma. In New York, 44 hotel loans backed by bonds of $1.2B are delinquent, according to Trepp. Houston’s hotel properties are facing 39 delinquent loans to the tune of $682M. Chicago’s hotel properties are looking at $990M in delinquent loans.
According to Keith Thompson, a principal with the hospitality group at the Avison Young brokerage firm, said, “Generally speaking, every hotel in America has lost 20 to 35% of its value in the last six months.”
So what is a hotel property to do when faced with no income? Get creative…particularly when analysts don’t expect the hotel industry to fully recover until 2023.
Here are some of the creative rethinking hotel properties are doing all around the country:
- Government efforts nation-wide have picked up some of the slack by leasing hotel rooms for medical workers and COVID patients who could not properly isolate at home.
- Government efforts have funded rooms and meals for doctors/nurses, homeless and COVID patients from New York to Miami to San Diego.
- Family-owned small hotel properties and their lenders arranged forbearance programs on monthly mortgage payments…programs that “have been a major lifesaver. Otherwise, we would be permanently closed,” said Alex Nahabetian, a family-owned hotel manager in Miami.
- Most properties nation-wide have been betting that workers need office spaces and desks. Some rooms/offices are leased by the day/week/month and rates tend to e some -30% less than overnight guests pay.
- Owners are rethinking common areas as are parents and teachers. Conference spaces have become schools and centers for remote learning.
Other commercial spaces now vacant due to the COVID-19 pandemic can also get creative. Tania Gawel, director of sales at a 140-room property in Elmhurst IL, said, “It’s been very slow so it’s all about thinking outside of the box.”
Right. Some revenue is better than no revenue.
Thanks to The New York Times