Death of “Corporate Cool” W Hotel San Diego
Death of “Corporate Cool” W Hotel San Diego
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Sunstone Hotel Investors Inc. intends to forfeit the 258-room W San Diego to its lenders after its efforts to reach a compromise on the luxury hotel’s $65 million securitized mortgage failed.
Sunstone, a real-estate investment trust that owns 43 hotels, bought the W for $96 million in 2006 from a group led by developer Gatehouse Capital Corp. Since then, the slumping performance of the W San Diego and the broader hotel market has made supporting that mortgage a challenge for Sunstone.
Foreclosures and forfeitures of hotels are becoming commonplace in this recession, though a public REIT turning over a high-profile, luxury property still is rare. Default rates on securitized mortgages backed by hotels have risen sharply as travelers have cut back, occupancies and revenues have tanked and, subsequently, hotel owners have run into difficulty making their debt payments. To wit, 3.16% of securitized mortgages backed by hotels now are delinquent on payments as compared to just 0.44% at this time last year, according to Trepp LLC.
A recent report by the special servicer of the W’s mortgage, Centerline Serving Inc., noted that the W San Diego since 2007 has failed to generate enough monthly income to cover both its operating costs and its interest payments. Sunstone has been covering the shortfall since 2007 to keep the loan out of default, but it opted this month to stop doing so.
The W San Diego has suffered partly because of the national decline in business and leisure travel. Additionally, in its downtown location it isn’t within convenient walking distance from San Diego’s Gaslamp District or the San Diego Convention Center, . said John Arabia, an analyst with real estate research company Green Street Advisors Inc.
The whole Hotel Industry is going to reel from this.
The more I think about this, these “boutique party hotels” (mostly phony and corporate anyways) are really in trouble.
Their target demographic 25-39 or so, is really hurting of liquid cash these days. Striped shirts are toe tagged. Plastic tiaras and lame “girls nights out” aren’t going to cut it.
The 40 to 50 monied crowd, or older couples with money won’t go to these places (too loud, too frugal etc).
Any 25 to 39 year olds with half a brain are going to skip eating and partying at these places because the food quality and girl quality is so low and price points are so high. (You can’t drag me there unless it’s a special event or they start importing Eastern Block and South American Models).
I think its game over for the ubiquitous “Corporate Cool” of the last 6 years. (Thank Goodness). Unless they decide to legalize prostitution and turn these things into High-End Brothels.
Witness the rise of the Hipster/Wimpster. (No Thanks).
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The Rest is Up to You…
Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life
http://www.thegmanifesto.com
Mickey Factz featuring The Cool Kids “Rockin N Rollin”
10/06/2009 at 8:08 am Permalink
So what would be a ‘Certified G’ boutique hotel in NYC?
I’ve stayed at Bowery, Gansevoort, and Maritime.
The first was my favorite and in a cool neighborhood – walking distance from SoHo shopping and the rest of the LES.
Gansevoort was ‘hip’ in a striped shirt kind of way, but it seemed like a lot of 40 year old women trying to look 30 and 45 year old guys trying to look 35 – kind of a Miami-vibe but in a bad way.
Maritime was thematic, which can be annoying, but otherwise very cool. It was the cheapest of the bunch, had pretty good restaurants, and the staff was awesome. Front desk guy told me it was no problem to smoke a joint in my room as long as I kept the window open.
Any other recommendations? Agreed about ‘W’. It can be cool, but way overpriced for what it is.
10/06/2009 at 11:41 am Permalink
If you pay $300 a night for a tiny “hip” room and the fucking wide screen TV doesn’t work – that’s a clue.
W means Worst. Pretty funny that they JUST did a complete remodel of the lobby.
The math works out to about $250,000 running dept per room.
Next up to go down in SD….my money is on the Ivy.