What do you do when lenders take over two of your hotels, as your coping with the worst recession in seven decades? Well, if you’re Starwood Hotels, you make a $350 million bet with a single property from your W line. The hotel opened on January 15, 2010, and it’s banking on the reputation of Los Angeles as the center of the entertainment world. Located on Hollywood Boulevard and Vine Street, the new W Hotel hopes to attract star-struck tourists who want to get up close and personal with the movie industry.
The only problem is that fewer and fewer people are heading out to Los Angeles, which is putting a bit of a squeeze on the new property. There’s an opportunity hidden in the situation, however. Carlos Becil, W’s North American vice president, says, “When we come out of this down cycle we’ll own the upswing with all these newer hotels,” Becil said to Bloomberg News.
The financial crisis has been particularly hard on the W chain. The W San Diego was taken back by its lenders after Sunstone Hotel Investors, which had owned the property, couldn’t get the terms of its $65 million securitized mortgage changed. The W New York Union Square was bought by Dubai World in 2006. Well, it missed a payment, which wound up pushing the property onto the auction block back in December. Dubai World also has an interest in the W Washington, D.C., a loan on which is 30 days delinquent. The debt servicer and borrower are working on a solution.