RCA in the commercial property press:

Hawaii Hotels Face Fewer Visitors, More Debt

The Wall Street Journal reports: For the hotel industry in the continental U.S., this downturn is the worst since the Great Depression. But the Hawaiian resort industry is taking a beating that's even more severe.

Hotel-room demand in the state has declined sharply at a time when the number of expensively renovated rooms is rising. Thus, occupancy at Hawaii's resorts dropped to 66.9% in the first eight months of this year, the lowest level since the same period in 1993 and down from this decade's high of 80.7% in 2005, according to Smith Travel Research. Meanwhile, revenue per available room has fallen nearly 25% in the past two years and now averages $150.75.

That combination means a number of Hawaii's resorts no longer generate enough revenue to pay the mortgages on their properties. Distressed debt tied to hotels is rising across the nation, but Hawaii has more troubled hotel debt per room than any other state, about $23,256 compared with $5,083 in California and $5,345 in Florida, according to statistics based on data from Real Capital Analytics. Overall, Hawaii's distressed debt tied to hotels totals nearly $1.6 billion.

Real Capital classifies as distressed any loan that's in foreclosure, receivership or bankruptcy or has been revised by the lender to help the borrower.

Articles related to this topic:

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 Concord Starts PE Fund For Distressed Hotels
 Morgan Stanley Looks to Restructure CMBS

Posted by: Matthew Stone

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