More bad news for the hotel space: another $144 million in missed debt payments this month, this time courtesy of Ashford Hospitality Trust. The loans in question pertain to a portfolio of eight hotels. Ashford already missed four payments on a Minnesota hotel, whose mezz lender will be sending ownership interest next month.
Filling a need
This is just one of the hospitality casualties facing the world today as the tourism and travel sectors continue to take a battering from the coronavirus outbreak. Other industry titans, like Blackstone and Colony Capital, are also defaulting on debt payment for their hotels.
Swirling the drain
For some investors, distressed hotels make attractive apartment conversion plays. This is just one example of investors repurposing an underperforming asset to realize greater performance, with example projects in places like California. Per the law of supply and demand, converting hotels to other uses will increase occupancy levels at the remaining hotels. At surface level, this is a good thing for hospitality landlords but if travelers decide to cancel trips to busier hotels, fearing the contagiousness of COVID-19, we could wind up right back at square one.