As we have clearly illustrated, how can it be that equity markets keep hitting new highs when industry across the economic spectrum keep hitting new lows?
More than 23 percent of U.S. hotels are 30 days late or more in making their mortgage payments, according to data compiled at the end of July by Trepp, a financial analysis firm.
The number of hotels that are delinquent represent about $20.6 billion in loans.
At the end of 2019, the proportion was 1.3 percent, covering about $1.15 billion owed.
During the Great Recession, the value of hotel mortgages in jeopardy was $13.5 billion, 47 percent below the July figure.
Last week, almost 4,000 hotel executives signed a letter to Congress urging it to pass the HOPE Act, a bipartisan bill introduced to bring financial aid to commercial properties struggling to make mortgage payments.
The bill would give commercial property owners operating capital in exchange for a preferred equity interest in their properties. The program would use money already appropriated within the CARES Act Economic Stabilization Fund.
“The hotel industry is facing a historic wave of foreclosures” since the economic shutdown canceled business and personal travel, conventions, and special events, warned Chip Rogers, CEO of the American Hotel & Lodging Association. “Thousands of hotels can’t afford to pay their commercial mortgages and are facing foreclosure.”
TREND FORECAST: Yes, there will be more bailouts, and, yes, the cheap money flowing into the system will artificially inflate sectors and the economy for short intervals.
However, with millions of businesses destroyed, tens of millions unemployed, and foreign tourism years away from rebounding, the hotel industry will continue its “Greatest Depression” decline.
