Omni Hotel Files for Bankruptcy Protection
Suffering from the delays in building the San Diego Convention Center and an overabundance of downtown hotels, the owners of the Omni San Diego Hotel announced Thursday that they have filed for protection under Chapter 11 of the Federal Bankruptcy Act.
The Omni thus becomes the second major downtown hotel since early 1988 to file for Chapter 11. The U. S. Grant Hotel emerged from 14 months of bankruptcy proceedings last Friday, still suffering from an anemic 50% occupancy rate.
Representatives of Hotel Associates of San Diego Ltd., a partnership headed by Py-Vavra Development of Milwaukee that owns the 450-room Omni built into the Horton Plaza retail complex, said Thursday that the hotel will remain open during the bankruptcy proceedings.
“It’s going to be business as usual,” said attorney Jim Roberts. “It’s generating a positive cash flow. . . . The filing is necessary because of the debt load and a couple of factors that are beyond the operators’ control.”
Those factors include the many hotels that have opened downtown in anticipation of the opening of the San Diego Convention Center. The two-year delay in the latter has heightened competition, with many hotels cutting prices to attract the available guest traffic.
Roberts said that Hotel Associates’ $48-million, long-term loan from Teachers Insurance & Annuity Assn. of America has accrued $4 million in unpaid interest.
Roberts said the Omni is operating at an 80% occupancy rate, above the 69.7% average for all downtown San Diego hotels last year. Even so, hotel officials were counting on renting 600 to 900 more rooms per month if the convention center had opened as scheduled.
Roberts said that Hotel Associates may consider selling the Omni.
“There are a lot of things that are possible, but nothing’s really ripe yet. The sale to another buyer is always an option, but to the public, the hotel will continue to operate as it has,” he said. “We’re talking about buying time to refinance, sell or do some other variation of that.”
