Hotels are headed for an Historic level of Foreclosures, Lodging Group warns

Nearly one out of four mortgage-backed hotel loans are delinquent, according to the American Hotel & Lodging Association.

Payments on nearly one-fourth of all loans backed by hotel real estate are delinquent by at least 30 days, signaling an imminent and unprecedented wave of foreclosures, according to the American Hotel & Lodging Association (AH&LA).

It notes that the $20.6 billion in delinquent payments on commercial mortgage-backed securities (CMBS)—23.4% of all CMBS loans extended to hotels—compares with overdue payments of $1.15 billion at the end of 2019, or 1.3% of outstanding CMBS loans at the time. The current level of delinquencies even surpasses the $13.5 billion that lenders were owed during the Great Recession that started in 2008, according to the association.

The report, compiled for the AH&LA by a research company called Trepp, is the latest in a torrent of bad news from the association about the state of its industry. Its release was accompanied by the announcement that 4,000 lodging executives have signed a letter to Congress, urging lawmakers to save the business by pushing through a federal relief package aimed specifically at the lodging trade.

Similar industry-specific measures are being pushed by the restaurant industry, with lobbying from both the National Restaurant Association and the Independent Restaurants Coalition.

The measure supported by the AH&LA, a bill known as the HOPE Act, would create an emergency fund to help hotels repay their CMBS loans.

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