Local hotels being auctioned off are part of $470 million sales package
SAN JOSE — Two hotels in the Bay Area, one in the South Bay and the other on the Peninsula, are part of a coast-to-coast package of hotels that are being offered for sale by a bankrupt owner.
Eagle Hospitality Trust, a Singapore-based real estate firm, seeks to sell 15 hotels around the country, including the two in the Bay Area, through what is known as a stalking horse auction that is used to determine a minimum price for the assets being sold.
The two Bay Area hotels included in the auction are the Four Points by Sheraton at 1471 N. Fourth St. in San Jose and the Holiday Inn & Suites at 330 N. Bayshore Blvd. in San Mateo, according to documents on file with the U.S. Bankruptcy Court.
The overall proposed purchase price for the 15 hotels is $470 million, court records show.
Eagle Hospitality Trust, which owns 18 hotels in the United States, including eight in California — the world-famous Queen Mary Hotel in Long Beach among them — filed for a Chapter 11 bankruptcy on Jan. 18 in an attempt to reorganize its finances.
The court papers show proposed purchase prices for several of the hotels.
Four Points by Sheraton in north San Jose has a proposed purchase price of $33.5 million, court records show.
The economic woes spawned by the coronavirus have jolted the hotel sector and undermined hotel revenues.
Government-ordered lockdowns to combat the coronavirus have severely restricted business operations and health-related concerns about the deadly bug have chased away numerous would-be travelers, leaving hotels with many empty rooms.
The resulting financial difficulties have engulfed several Bay Area hotels in bankruptcies, mortgage defaults, and delinquencies involving huge financing packages.
At present, the hotels in the Bay Area known to be in financial distress of one variety or another include:
- Fairmont San Jose, an 805-room hotel in downtown San Jose. Bankruptcy.
- Hyatt House Pleasant Hill, a 142-room hotel in Pleasant Hill. Delinquent loan package.
- Hyatt House Pleasanton, a 128-room lodging in Pleasanton. Delinquent loan package.
- Club Quarters Hotel, a 346-room hotel in San Francisco. Delinquent loan package.
- Hotel Avante, a 91-room lodging in Mountain View. Mortgage loan default.
- Wild Palms Hotel, a 208-room hotel in Sunnyvale. Mortgage loan default.
- Four Points by Sheraton, north San Jose, 196 rooms. Bankruptcy case.
- Holiday Inn Hotel & Suites, San Mateo, 220 rooms. Bankruptcy case.
The current difficulties for the hotel sector amid the coronavirus are the worst Alan Reay, president of Atlas Hospitality Group, has seen.
“Even after the crash in 2008, you didn’t have hotel owners closing the doors and just walking away,” Reay said.
Hotel bankruptcies so far in 2021 could easily eclipse the number of hotel bankruptcies two years ago.
“In 2019, in the whole country, there were only two hotel company bankruptcies that had debts of more than $50 million,” Reay said. “During the first two months of 2021, you already have the Eagle Hospitality bankruptcy with more than $500 million in debt, and you have the Fairmont San Jose bankruptcy, with debts that exceed $100 million in debts.”