IRVINE, CA-The number of California hotels that are in default or have been foreclosed on jumped dramatically in the third quarter of 2009, according to a new report by Atlas Hospitality Group, an Irvine-based consulting and brokerage firm. The Atlas analysis shows that the number of hotels that were foreclosed on rose 213%, from 15 to 47 since the beginning of the year, while the number of hotels in default increased 391%, from 53 to 260.

The Atlas report further shows that California has 2,779 rooms that have been foreclosed on, up 455% for the year; the 27,893 California hotel rooms in default represent an increase of 426% since the beginning of the year.

The report, which summarizes the California REO hotels by county and by room count, follows Atlas forecasts earlier in the year that said the state’s hotel industry was facing a wave of foreclosures as a result of the recession and financing woes facing their owners. Alan Reay, president of Atlas Hospitality Group, said earlier this year that the conditions in the state’s hotel market represented a “perfect storm” of circumstances that portended “a very bleak outlook” for California’s hotels.

That forecast has been borne out by the dramatic rise in foreclosures and defaults, a trend that is expected to continue. The hotel market’s troubles also have been reflected in events like San Clemente-based Sunstone Hotel Investors’ decision earlier this year not to make the June 1 payment on its $65 million mortgage for the W Hotel in San Diego. That decision reflected a “significant and continuing deterioration in demand for luxury lodging,” the REIT said at the time in choosing what it termed an ” elective default” on the mortgage. Sunstone also was involved in another deal illustrating changing market conditions: the $19.3 million sale of its 292-room Marriott Riverside hotel in Riverside to San Diego’s Pinnacle Hotels group, a price that at the time ranked among the lowest paid per-room for a full service Marriott in the US, according to Atlas.

The new Atlas report shows that the largest hotel to be foreclosed on in California is the 400‐room St. Regis Monarch Beach Resort in Dana Point. The California county with the most REO hotels is Riverside with nine properties totaling 252 rooms.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.