Hotel Industry Apocalypse: 7 Of 10 US Hotels Say They Will Be Out Of Business In Six Months!

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Hotel owners and retailers have seen their businesses dramatically collapse throughout the current economic recession. Amid a holiday season marked by a critical spike in confirmed viral infections – which previously used to be the most crowded time of the year for both brick-and-mortar retailers and hoteliers – in addition to social distancing rules and the shift to online shopping and remote working, these industries are on the brink of a major a financial catastrophe.
Since several anchor stores have been closing doors for good to switch to virtual platforms, and the home office trend is considerably intensifying, the empty retail space on malls and vacant hotel rooms are setting the stage for a change in the landscape of both industries, as their owners fall behind on loans and have accumulated billions in debt. Now, every day it passes by, we see an increasing number of permanent store closures, and on the other hand, a recent survey alerted that 7 in 10 hoteliers are going out of business within less than 6 months. In this video, we’re going to uncover the apocalyptic state of the hotel and retail industry.
A new survey from the American Hotel and Lodging Association forecasts that seven in ten hoteliers are likely to be out of business in six months. To be precise, 71% of all hotel owners across the country affirmed that without federal aid their businesses wouldn’t survive for much longer. The sector, which has been the most impacted by social distancing regulations and the consequent economic downturn, has become a major financial liability since owners couldn’t afford to pay their mortgages for months now.
The federal response of imposing strict lockdowns and letting businesses die will bring enormous financial damage. Several historic and iconic properties continue to be shut down all over the U.S. In the New York area, the owners of 43 New York hotels are delinquent on loans backed by $1.5 billion in bonds.
Shopping malls and hotels of the nation’s biggest cities are struggling to meet their accumulated loan payments. Nationwide, considering that more than a thousand hotel and retail borrowers have defaulted on their loans, over $35 billion in delinquencies were piled up ever since travel and tourism stalled due to virus-related protocols and visits to shopping malls became unappealing and unsafe, particularly now that consumers have an easier online alternative.
At this point, almost 20% of all hotel loans and over 14% of all retail loans generated by commercial real estate lenders and packaged into securities that are sold to investors are currently delinquent. We just had Black Friday, which used to be the kickoff of the frenetic shopping period leading up to Christmas, producing half of a year’s sales for several non-food retailers. But this year, while brick-and-mortar sales were lower than expected, e-commerce has experienced significant growth.
Evidently, large corporations such as Amazon, Walmart, and Target were the biggest beneficiaries. For the fourth quarter, Amazon’s revenues are forecasted to top $100 billion for the first time. By contrast, small business owners that have managed to keep their stores open in the hope to compensate for this year’s massive losses with the revenue of the holiday season are coming to the realization that their downfall is inevitable.
As a result, shopping malls are becoming obsolete a lot faster than analysts previously predicted. Experts suggest that hundreds of America’s 1,100 malls are likely to shut down. As for the hotel industry, in New York alone, 20% of its hotel rooms could close before the current crisis is over. That accounts for 6,800 rooms that will have to be converted to some other use.
Countrywide, occupancy rates declined to 33% from 70% during the same time last year, while average room prices fell to $83 per night from $133, reported Cushman & Wakefield. The outcome of this sharp rates drop and the upsurge in vacant rooms, led to 738 borrowers defaulting on hotel loans backed by about $17 billion in bonds as of October 31.
The arrival of a widely accepted vaccine may help, but it won’t fix the financial wound opened throughout this crisis. All these businesses are being smashed and wiped out of the map. Indeed, the worst is yet to come, and as a tidal wave of bankruptcies and foreclosures of hotels and retail stores is still forming, when the crash happens – don’t be mistaken: it will drag whatever is left of our economy with it.
KEYWORDS: hospitality industry apocalypse, retail apocalypse, hotel industry downfall, economic collapse, economic recession, Great Recession, loan delinquency, Big Short 3.0, store foreclosure, bankruptcy, financial catastrophe, economic downturn, mortgage default, financial damage, economic meltdown, hotel closure, mall closure, financial crisis.

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