It is very tumultuous times for hotels and operators that loaded up on debt before Covid-19 and now are unable to service it.
Fairmont San Jose is the latest victim. The hotel filed for bankruptcy protection on Friday and immediately closed its doors while trying to restructure the debt and find a new operator.
You can access Fairmont San Jose’s website here.
There’s only notice on limited room servicing and no valet on Fairmont.com:
Here’s an excerpt from the Mercury News:
The Fairmont Hotel, a landmark in downtown San Jose, filed for bankruptcy on Friday and closed its doors — but says it will reopen and resume operations within two to three months.
The owners of the iconic, 805-room hotel said they closed the Fairmont while they attempt to find a management partner and extend the existing mortgage debt.
“We will be back in 60 to 90 days with improved finances and a new hotel management team,” Singer said.
The Fairmont lost at least $18 million in 2020 and is projected to lose at least $20 million in 2021, the hotel’s owners said.
NBC Bay Area reports that the hotel’s brand will change:
When the hotel reopens in mid-2021, ownership expects it will have a new manager and brand; one with the ability and willingness to infuse tens of millions of dollars of capital into the hotel and its operations, and a robust pipeline of future convention business for the hotel.
The hotel is a landmark 805-room property at 170 South Market St. The 20-story, two-tower hotel has 65,000 square feet of state-of-the-art meeting and event space, three restaurants with bars, a cafe bakery, a fitness center, and a rooftop pool and gazebo. The hotel features grand ballrooms for large conferences and conventions as well as intimate spaces for smaller gatherings.
Many hotels cannot service their debts, and some owners may find it easier to hand back the keys to the lenders and let them sort the mess out. Many lenders are trying to avoid defaults by extending loans to keep doors open.
\There is very little need right now for convention hotels with 800+ rooms, considering that most Silicon Valley companies that this hotel must have served are working “virtually.”
There will be management change at this hotel, and it is unlikely that it will reopen as Fairmont. It is interesting to see what brand will take over this monstrous hotel.