Awful housing market puts vacation residences in reach

by Tom Johansmeyer on

Looking for a vacation home? Well, the time is right! With home seizures hitting a record high, you don’t need to be an infomercial star to realize that prices are headed in your direction. Places that were once wholly unattainable may now almost be in reach, and second homes at nasty places you’d never want to visit (especially regularly enough to have a vacation home there) are moving for pocket lint change.

Last month, 95, 364 homes were seized by banks – a record-setting number (since 2005, when we first started keeping score). Bad loans and unemployment are making the situation worse. So, the time has come for people with deep pockets to take advantage of the less fortunate, a familiar enough refrain throughout human existence. When you close on your new vacation home, though, don’t bring cake for the vanquished: someone will probably get the wrong idea and make a big “thing” of it.

[photo by Casey Serin via Flickr]

For hotels, bankruptcies looming

by Tom Johansmeyer on

The financial crisis isn’t just a problem for the residential market – hotels are getting slammed. So are cruise lines, and we all know about the airline industry’s unending woes. The travel industry in the United States is steeling itself for a wave of foreclosures and bankruptcies.

So far, the hospitality business hasn’t been hit hard, certainly not to the extent that the residential real estate market has. But, Los Angeles hotel attorney Jim Butler was quoted in USA Today as saying that the bubble is growing, even if “it hasn’t burst yet.”

Occupancy rates, and revenue, consequently, are expected to plunge this year. We all know that. If you’ve noticed the wave of travel deals that we’ve been running here at Gadling, it’s not hard to do the math. This translates directly to their ability to meet mortgage obligations.

According to Mark Woodworth of PKF Hospitality Research, 36 percent of full-service hotels in the United States won’t have the cash flow to pay their mortgages this year – compared to 21 percent in 2008.

Ouch.

So, should you adjust your vacation plans this year? How do you avoid hotels that are in financial trouble?

The good news is that a foreclosure usually won’t shut a hotel down. Closing the property means closing any possibility of revenue, and creditors want cash more than the building. But, cuts will be common, from room service hours to staff at the front desk. You’ll pay less, and you’ll get less for your dollar. But, at least you’ll still be able to get a room.

Still, if you’re sensitive to the risk of losing your stay, try to avoid newer hotels. They are more likely to struggle, as they don’t have the brand recognition and repeat guests that benefit established properties. For the most part, though it should be business as usual, though “usual” might be a bit slimmer than you remember.