Member Article

According to the fourth quarter 2001 report of Lodging Econometrics, the accelerated decline in the operating performance of the lodging industry will continue until the middle of the first quarter of 2002 due to the events of September 11, 2001, and the recession. Further, while the operating performance of the lodging industry may show signs of improvement by September of 2002, the effects of that improvement may not be felt until the first quarter of 2003. Many hotels will continue to undergo hardship and may consider filing for bankruptcy to get some relief from their creditors. If a hotel files for bankruptcy, decisions relating to the hotel may be subject to scrutiny and approval of the bankruptcy court. Further, an owner will need to enter into protracted discussions with creditors to formulate an acceptable reorganization plan. As an owner, you may be able to avoid such a predicament by taking proactive steps. To do so, an owner must be realistic about the likelihood of a hotel’s success. Set forth below are some of the steps an owner can take to make an assessment of such likelihood and to formulate a realistic approach.