California is already cursed with an unemployment rate -- 12.5% -- that is much higher than the national average. It is one of a handful of states (Nevada, Florida, Arizona are the others) that has been considered ground zero for the housing and real estate crisis. Now, you can add one more notch on the state's tightening economic belt: hotel foreclosures in California skyrocketed 27% in the first quarter of 2010.

Atlas Hospitality Group, a California company that is in the hotel selling biz, reports that foreclosures of hotels in the state are up to 79 properties from 62 at the end of 2009.

In an interview with Businessweek, Atlas president Alan Reay said, "If we look throughout the U.S., states like Florida, Nevada , Arizona and California were tied very closely to the housing boom and that was a big driver of the economy there. Hotels that are suffering the most are in areas with high unemployment."

The Atlas California report is filled with bad news for the state's hotel industry, concluding that 406 hotels are "either in default or have been foreclosed on."

The largest hotel to be foreclosed on, according to the survey, is the Marriott Hotel in downtown L.A. The 469 room giant was just sold to new investors.

Of the 79 California hotels foreclosed upon, says the report, only 7% - 9% have been resold by lenders. Not a good batting average by any measure.

And, if all this isn't bad enough, Atlas concludes that it believes "the real number of distress deals is much higher than shown in our report, as we estimate closer to 1,000 hotels are operating under some form of forbearance agreement."

According to the Press-Enterprise, Los Angeles County had seven foreclosed hotels, with San Diego and Sonoma counties each reporting six.

AsPortfolio.com points out in a post, the hotel industry, in general, has been in trouble because of a combination of overbuilding and the decline of what is often referred to as "road-warrior traffic."

Of course, what is bad for California's hotel industry can be good for those looking for a bargain staying at California hotels -- the ones, of course, that remain open,

Despite the impact of the Great Recession, California, especially Southern California, remains one of the prime tourist destinations in the U.S., not to mention a place famous for its business conventions of all sorts.

In a separate report last month, Atlas Hospitality Group reported that, as one example, "with one-third of all Orange County hotel rooms going empty, the average room rate fell 13% last year." That is roughly $19.53 a night, Atlas quotes lodging experts PKF Consulting as figuring.

Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think, The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.

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