San Diego County had California’s highest number of hotels foreclosed on by their lenders during 2011, but also saw the state’s sharpest drop in new default filings, according to a new report from Irvine-based Atlas Hospitality Group.
Atlas reported Jan. 10 that San Diego County had 27 hotel properties taken over by their lenders, up 68.8 percent from 2010. New notices of loan default totaled 14, down 54.8 percent from the prior year.
California as a whole had 517 hotels in some type of loan distress — default or foreclosure — during 2011, an increase of 11.2 percent from 2010. While foreclosures rose 66.7 percent, to 230, the number of new default filings declined 12.2 percent, to 287.
Atlas researchers said hotel defaults rose during the first half of 2011 before leveling off. Increased hotel property values and rising industry revenue “were two major factors” in the decline in defaults.
The brokerage and consulting firm predicts California defaults will fall 30 to 40 percent in 2012, with foreclosures dropping 15 to 20 percent.
“There is no question that the hotel market has now bounced off the bottom and is in full recovery mode,” the report said. “The only area that we see as struggling is the secondary/tertiary markets, especially when you have older and somewhat functionally obsolete hotels.”
— Lou Hirsh