The foreclosure is a possible sign of distress for a downtown hospitality industry still struggling to recover from the pandemic. Business travelers remain sparse, so the hard times may not be over, and other hotels could also be headed for trouble.
Wells Fargo Bank took control of the 610-room JW Marriott Chicago hotel Friday morning with a winning bid of nearly $251 million during a foreclosure auction.
“JW Marriott may not be the last hotel to find itself in the soup,” said Maverick Hotels and Restaurants CEO Robert Habeeb. “If a prominent hotel like that can fall into foreclosure, it’s a sign of some weakness in the market.”The hotel opened in 2010, soon after developers began transforming aging Financial District office buildings into hotels to serve convention-goers and the growing tourist trade.
Most hotel operators have so far avoided getting dragged into court by their lenders, Habeeb said, even though back in 2020 many thought the pandemic-related flood of red ink might overwhelm the industry. But the federal Paycheck Protection Program, which funneled billions to suffering businesses, along with the willingness of many lenders to renegotiate hotel loan payments, got many hotels past the initial crisis.
The real test will come when summer ends and most tourists vanish. Business travelers historically filled Chicago’s hotel rooms in colder months, but with offices nationwide less than half full, most companies are reluctant to send employees on trips.
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