US: A national report compiled by Trepp reveals that nearly one in four hotel CMBS loans are delinquent on payment, leading to 4000 industry leaders writing an urgent letter to Congress for support.
The report shows that 23.4 per cent of loans (as of last month) are delinquent by more than 30 days, marking the highest level on record. This compares to the end of 2019, where only 1.3 per cent of loans were delinquent.
These figures equate to $20.6 billion in delinquent hotel CMBS loans for July – a 53 per cent increase from the volume recorded during the great financial crisis.
Almost 4000 industry leaders have since written to Congress, calling for the enactment of the HOPE Act. The legislation would provide commercial property owners the temporary liquidity needed to keep doors open in exchange for a preferred equity interest in the property. It would not require any new funding and would utilise existing monies from the CARES Act Economic Stabilisation Fund.
Chip Rogers, president and CEO of the American Hotel & Lodging Association (AHLA), said: “With record low travel demand, thousands of hotels can’t afford to pay their commercial mortgages and are facing foreclosure with the harsh reality of having to close their doors permanently. Tens of thousands of hotel employees will lose their jobs and small business industries that depend on these hotels to drive local tourism and economic activity will likely face a similar fate.”
Cecil Staton, president and CEO of Asian American Hotel Owners Association (AAHOA), commented: “Hoteliers are responsible for millions of jobs in communities across the nation, but unless Congress acts, there may not be businesses left for those workers to return to at the end of this pandemic. We are optimistic that the HOPE Act will help hoteliers to address the debt crisis facing the lodging industry, and save good American jobs and small businesses.”