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California hotel foreclosures jump in 2011

The number of California hotels foreclosed on jumped 66% last year, but the bloodletting is expected to diminish in coming months as the hospitality industry gets back on its feet.

Lenders foreclosed on 230 hotels in 2010, up from 138 the year before, Atlas Hospitality Group said in a report. Among them were Hampton Inn & Suites Ontario, Country Inns & Suites by Carlson in Calabasas and the Ritz-Carlton Lake Tahoe.

The largest hotel to go back to the lender was the 331-room Hilton in Sacramento.

San Bernardino County saw the largest number of defaults with 31, followed by Riverside County with 24 and Los Angeles County at 21.

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The number of hotels in default — a preliminary step to foreclosure — declined 12.2%, however, and Atlas expects hotel owners will continue to do better as the economy improves. The number of hotels in default increased through the first half of the year and then leveled off.

“We are predicting that the number of hotel default filings will fall substantially in 2012, down 30% to 40%, and hotel foreclosures will be down 15% to 20%,” Atlas President Alan Reay said. “There is no question that the hotel market has now bounced off the bottom and is in full recovery mode.”

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