California hotel defaults, foreclosures and sales — weather vane for hotels everywhere? Atlas Hospitality Group’s latest survey

Last week in Los Angeles, Alan Reay, CEO and founder of Atlas Hospitality Group, presented hotel industry executives with the latest information from the company’s sales survey. Reay recounted Atlas Hospitality’s 2009 projections, and showed how accurate they were wtih a comparison of forecast versus actual results. He also noted how the recent “Perfect Storm” of economic events had set four new (bad) records and a bracing forecast for distressed hotels in the near future . . .

Alan X. Reay, with over 30 years in the hotel industry, is President and Founder of Atlas Hospitality Group (AHG), a brokerage/consulting firm specializing in the California hotel market. Atlas is widely recognized as the market leader in California hotel sales, having completed over $2 Billion in sales transactions. In addition to their brokerage division, Atlas has established a world class research department that is utilized by major lending institutions, law firms and hotel owners/operators. AHG surveys on hotel sales and development trends have resulted in Reay being regarded as the “expert” on the California hotel market. In fact, Reay was the first in the U.S. to publish statistics on the distress in the California hotel market and in 2008 was the first to accurately predict the percentage decline in California hotel values. Reay is a regular speaker at major industry events. He has authored a number of articles for both the U.S. and international markets. He publishes two monthly newsletters–Atlas Hospitality News and Atlas Hospitality Lender News. Reay has been featured in numerous trade publications, newspapers, and on television and radio, including the Wall Street Journal, CNN Money, Bloomberg, Business Week, USA Today, LA Times, LA Business Journal, San Diego Tribune, Hotel & Motel Management, California Real Estate Journal, FOX News, KTLA News and National Public Radio.

The Atlas Hospitality Group’s Sales Survey

Reay says that the “Perfect Storm” of economic stress has set four new records:

• Record decline in RevPAR
• Record number of hotels available for sale
• Record low in number of hotels sold
• Record increase in the number of distressed hotels

Although Atlas Hospitality Group’s study only covers the California markets, Alan Reay and many other knowledgeable industry experts believe that California is representative of other major markets in real estate and hotel distress. And, to date, the results of distress in California have been:

• 347 hotels in loan default
• 87 hotels foreclosed on
• 1,000+ hotels operating under forbearance agreements

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