The real estate investment decision believe in that operates the Queen Mary in Extended Seashore and owns 26 other motels submitted for bankruptcy defense this 7 days, signaling what could be the get started of a wave of bankruptcies in the hospitality marketplace.
The 85-yr-old former ocean liner-turned-floating lodge has been struggling, like the rest of the nation’s lodge business, from a dramatic fall in desire owing to the COVID-19 pandemic. Eagle Hospitality Trust’s Chapter 11 submitting represents the hottest setback for the iconic vessel that Prolonged Seaside had hoped would be the crown jewel in an eventually thriving leisure district.
The town of Extensive Seashore, which owns the ship, issued a statement expressing it will try to decide what Eagle Hospitality’s speedy ideas are for the Queen Mary. The vacationer attraction has been closed considering the fact that Could since of the pandemic.
Eagle Hospitality Belief was created in 2019 by City Commons, the genuine estate expenditure and development business that owns a 66-yr lease to operate the Queen Mary and develop the 65 acres all-around it. The lease extends until eventually 2082. The belief was shown on the Singapore Inventory Exchange with the aim of increasing cash to finance hospitality-connected ventures generally in the U.S., which include a $250-million business growth all-around the ship referred to as Queen Mary Island.
The personal bankruptcy filing claims Eagle Hospitality has extra than $500 million in liabilities, the biggest of which is an $89-million bank loan from Lodging United states of america Lendo. A contact to a call amount shown in the bankruptcy submitting was not returned.
Urban Commons said it has been working the Queen Mary and assembly its money obligations to Eagle Hospitality. “We have carried out all the things in our energy to unite during these uncertain occasions, and get the job done with each other amicably to facilitate the finest likelihood of survival and results,” it explained in a statement.
The bankruptcy will come as the resort field faces its worst disaster in decades.
“The hotel industry has been totally devastated by the COVID pandemic, and 2020 will go down as the worst-doing calendar year ever for the U.S. lodge marketplace,” mentioned Alan X. Reay, founder of Atlas Hospitality Group.
But Reay said couple inns have submitted for bankruptcy as a result of the pandemic due to the fact creditors have agreed to defer mortgage payments to allow for time to recover.
“Eagle Hospitality may perhaps be an early indicator of what is to appear in 2021 as sure lenders determine to pull back again from deferring payments or the place they are worried that providing additional time will only erode values further,” he mentioned.
In all of final calendar year, only two hotel companies with much more than $50 million of liabilities filed for individual bankruptcy, Bloomberg documented. “That’s continue to the most because 2012, which saw four filings, but well down below the 10 situations seen in 2009,” it explained.
The Queen Mary has very long been a obstacle to operate, with a 2017 study recommending that as much as $289 million worthy of of renovations and updates were being needed to continue to keep parts of the ship from flooding. The ship has 314 rooms and 3 places to eat, some of which have undergone renovations in the last several a long time.
City Commons launched a prepare in 2017 for the $250-million Queen Mary Island project, stating the amusement sophisticated on the waterfront adjacent to the historic ship was expected to assistance pay back for the ship’s desperately required repairs.
The Queen Mary produced $205.3 million in economic output a yr, with $93.7 million put in in Extensive Seashore, in accordance to estimates in an economic impression examine that City Commons introduced previous 12 months. The ship also supported 2,224 work opportunities in Los Angeles County, with 1,374 of those in Extended Beach, according to the examine.
Around the final 50 several years, Very long Beach has introduced in numerous corporations — together with Walt Disney Co. — to manage the ship and produce the adjacent oceanfront assets, with blended outcomes.
Disney attempted in 1990 to incorporate the ship into a $3-billion sea-themed amusement park. But the Burbank entertainment big declined to renew its lease two several years later and as an alternative turned its focus to creating the California Experience park following to Disneyland.
1 leaseholder filed for personal bankruptcy in 2005, and an operator abruptly ended its deal and walked away. For substantially of 2009, in the aftermath of the Great Economic downturn, occupancy prices for the ship’s rooms dropped to 50% — hardly sufficient to deal with expenses.
Determined to deliver additional revenue, in 2018 the Queen Mary finished renovating and increasing stateroom B340, which has been highlighted on television shows this sort of as “Ghost Hunters” and “Most Haunted” for its history of unusual noises and unexplained nighttime happenings. It reopened the room, charging $499 a evening.
Long Beach said in its assertion that it “is concerned” about the Eagle Hospitality bankruptcy, “as the enterprise has a lengthy-expression obligation to guarantee the upkeep and procedure of the city’s asset.”
The metropolis manager ideas to talk about the Queen Mary with the Metropolis Council subsequent thirty day period, the statement stated.
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