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MONTEREY, CA- Hong Kong and Shanghai Hotels Ltd. said this week it will close Quail Lodge, a 97-room hotel in Carmel Valley that the company says has been unprofitable since the dot-com bubble burst in 2000. The hotel will close in mid-November, most likely permanently, the company said, and 199 employees will be cut loose. The golf club, which has 300 members, likely will remain open and will service events, albeit with reduced services.

The Quail Lodge news comes less than a month after the owners of the new 130 room Homewood Suites in La Quinta decided to shut down the hotel. “We are now starting to see owners and lender’s closing down hotels as it is less expensive for them to do this,” Alan Reay, president of the hotel brokerage firm Atlas Hospitality tells GlobeSt.com. “This is a trend that we expect to see a lot more of in the coming months.”

Hong Kong and Shanghai Hotels Ltd. acquired the hotel indirectly in 1997 as a wholly-owned subsidiary. Neil Galloway, the company’s chief financial officer said on a conference call that despite funding “tens of millions of dollars” in cap ex and operating losses to maintain the property as a AAA/Four Diamond property for the past decade it “has suffered a net loss every single year for the past eight years of operation…even in 2007, generally a record year for the hospitality industry.”

“The closure is expected to be permanent,” he added. “We see no realistic chance of turning around the financial fortunes of quail lodge with all future financial projections showing continued losses.”

The board of directors also issued a printed announcement in accordance with the Worker Adjustment and Retraining Notification Act, which requires that employers of more than 100 give notice 60 days in advance of mass layoffs. “With the amount of revenue that Quail Lodge can generate, as compared to its current operating costs, fixed overheads and capital expenditure requirements, the Board has come to the conclusion that it is not possible to operate Quail Lodge on a financially viable basis,” it said.

There are no plans for the sale or redevelopment of the property, either, Galloway said.

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