A few weeks ago, I reported for WalletPop on the wave of foreclosures striking California hotels -- a 27% increase in the first quarter of 2010. Some large hotels changed ownership because of the continuing weakness of the real estate/hotel market here.
Now comes word from the Los Angeles Times that one of Southern California's most iconic and most photographed hotels, the 451-room Sheraton Universal, is up for sale at what is likely to be a relatively bargain price. The hotel has been described as being "financially troubled" for so long, it has practically become part of the hotel's official name: "Welcome to the financially troubled Sheraton Universal Hotel. May I take your bags?"
But this could be a good thing for tourists. In general, prices have been going down for rooms. As I reported on April 5, the Atlas Hospitality Group had recently issued a report looking at the situation in Orange County, a popular tourist destination and home of Disneyland. It concluded, "with one third of all Orange County hotel rooms going empty, the average room rate fell 13% last year," which comes out to a savings of roughly $20 a night. Nothing to sneeze at, for sure.
The Sheraton Universal was bought for $122 million back in 2007, but, according to the Los Angeles Times, was appraised at only $75 million just two months ago, quoting Bob Kaplan, senior managing director of PKF Capital.
While there is speculation the hotel, which recently had a makeover of its rooms, could sell for about $90 million, that is still a staggering loss off its 2007 purchase price before the Great Recession firmly set in throughout Southern California, one of the epicenters of the nationwide (world-wide) subprime-mortgage caused economic meltdown.
Lowe Enterprises, which bought the Sheraton Universal in 2007, lost control of it earlier this year, reports the Times, after it hemorrhaged income due to falling occupancy.
That alone shows the magnitude of the problems facing the hotel industry in Southern California. The Sheraton Universal, after all, sits next to two of the biggest tourist attractions in the area, Universal Film Studios and amusement park, and City Walk.
It is unclear whether a new owner will continue to operate the hotel under the same name.
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.
California hotel industry still suffering as landmark hotel for sale