Famous for being used for the opening shots of Hawaii-Five-O, the Ilikai in Waikiki is facing foreclosure because its owner failed to repay a loan that’s due. The owner is trying to sell the hotel-condo and it may be forced to close if it can’t find a buyer.
Court-appointed commissioner George Van Buren said that customers won’t notice a difference in service. He says that it’s unlikely the property will close — but he can’t be sure of that.
Mark Woodworth of PKF Hospitality Research says that many more hotels will “lack the cash flow” needed to pay their monthly mortgages in 2009.
While it’s rare for hotels to close, they are cutting back on services to save money. Fewer restaurants will open, room service hours will be cut and there will be fewer people working the front desk and the bell stand.
Among other large hotels that have undergone foreclosure or under notice for foreclosure: Renaissance Grand & Suites Hotel in St. Louis, and W Hotel and InterContinental Montelucia Resort, both in Scottsdale, Ariz. Owners of Ritz-Carlton Lake Las Vegas, Sheraton Downtown Orlando and The Tropicana in Las Vegas have filed for bankruptcy. MGM Mirage said this month that it “might not be able to stay in compliance” with a loan, which could lead to default.
Hotel operators say that it’s business as usual, but hotel consultant Richard Warnick suggests going with hotels that have been around for a while.
Bob Eaton of PKF Capital says those booking large weddings or meetings read the contract carefully. If a hotel goes bankrupt, they are considered unsecured creditors, which means they will be the last to be paid.
