Two hotels tumble into default

By George Avalos | gavalos@bayareanewsgroup.com | Bay Area News Group

PUBLISHED: March 24, 2026 at 8:44 AM PDT | UPDATED: March 24, 2026 at 8:58 AM PDT

Loan failures have jolted two hotels in Santa Clara County, financing defaults that offer grim evidence that a forbidding landscape still confronts the Bay Area hotel market.

Wild Palms Hotel in Sunnyvale and Hotel Avante in Mountain View are facing a notice of default that demands swift payment in full on a $54.1 million loan, documents filed on March 23 with the Santa Clara County Recorder’s Office show.

The 208-room Wild Palms Hotel at 801 East Fremont Ave. in Sunnyvale and the 91-room Hotel Avante at 860 East El Camino Real in Mountain View received the loan in December 2021 from a Rialto Capital Management affiliate.

This loan failure marks the second time in six years that the hotels have flopped into a financial default that threatens them with foreclosure. In 2020, both hotels were hit with a notice of default.

The first loan default was rescinded in June 2021, ending an eight-month ordeal during which the hotels faced the specter of seizure by their lender, which was different from the current financier. Now, foreclosure looms again.

“Hotel values have declined, and it is very difficult for borrowers to refinance their hotels,” said Alan Reay, president of Atlas Hospitality Group, which tracks the California lodging market. “We are seeing a liquidity crisis for hotels.”

The loan defaults surfaced at a time when the two hotels were experiencing an upswing in their revenue, according to a Morningstar Credit report issued in July 2025.

During the three months that ended in March 2025, the hotels generated a combined revenue of $860,500 a month. That was up 6.4% from the per-month revenue of $808,400 for all of 2024, which in turn was up 18.3% from the per-month revenue of $686,400 during 2023, the Morningstar report determined.

Hotel and real estate industry veterans Stephen Conley and Jeffrey Eisenberg head up affiliates that are the owners of the hotel properties.

Conley is the founder and former chief executive officer of the Joie de Vivre Hospitality firm, which under Conley’s leadership became the nation’s largest boutique hotel chain, according to the 2014 assessment of the hotels. Eisenberg’s experience includes ownership of mutiple hotels in the Bay Area.

The loan that’s now in default had a maturity date of Jan. 9, 2026, at which time the loan became due in full.

In numerous instances, hotel property owners have decided to ditch their loans and cease payments because they believe it’s in their best interest to stop throwing money at a loan due to the property’s fading value, according to Reay.

The hotel sector has suffered through multiple foreclosures of major hotels in the Bay Area.

Loan failures and foreclosures have engulfed the largest hotels in Oakland and San Jose, as well as high-profile big hotels in San Francisco.

In March 2025, a 276-room dual-brand hotel at 1431 Jefferson St. in Oakland was taken back through a deed in lieu of foreclosure of a $112 million loan.

In May 2025, the Signia by Hilton hotel, a 541-room lodging tower in downtown San Jose, was taken back by its lender through a foreclosure that valued the hotel at $80 million, or $147,900 a room.

In July 2025, the Oakland Marriott City Center, a 500-room hotel tower in downtown Oakland, was seized by its lender in a $70.2 million foreclosure of a delinquent loan.

More loan failures could lurk just over the horizon in the Bay Area.

“What we are seeing is a big wave of hotel loans that are coming due,” Reay said.