The last few months have been some of the worst for the travel industry in recent history. I’ve outlined several examples of how airlines have faced the brunt as customer demand tanked. Similarly, hotels are also on the chopping block now. A sudden drop in corporate travel has meant that a few hotels which were running almost full are suddenly deserted. This most recent news could well mean the start of an unfortunate trend for the hotel industry as it grapples with the reality of a depressed corporate travel market. The iconic Hilton Times Square NYC has announced that it will be closing down.
Hilton Times Square NYC Closing its doors
The Wall Street Journal reports that Sunstone Hotel Investors Inc, the company that controls the hotel, submitted a filing with the New York Department of Labor about the upcoming closure of the property. The 478 room hotel will close permanently in October and cut 200 jobs. However, a spokesperson for Sunstone wasn’t willing to confirm whether the hotel was closing permanently.
A spokesman for Sunstone Hotel Investors Inc., which controls the hotel, said in an email the company made the filing to indicate that layoffs might last longer than six months. He said the filing “was not intended to imply that there is a permanent closure.” He added that a “definitive reopening date has not been determined or established and will be impacted by negotiations with our lender, as well as market conditions.”
The hotel had stopped accepting visitors since March. Ever since the Covid-19 pandemic started, the situation has only become worse as financial woes for the hotel pile up.
The Hilton Times Square has been under unique financial pressure. Sunstone, which controls the property under a ground-lease arrangement, has a $77.2 million mortgage coming due in November. The company this year wrote down the value of the property by $107.9 million, to $61.3 million. Sunstone said in an August public filing that it hasn’t made mortgage payments since April and is in discussions with its lenders about possible solutions, which include handing over the property.
The Pundit’s Mantra
Given the current public health and economic conditions, we could well see the travel industry face more closures and job losses. After the CARES act funding restrictions expire at the end of the September, the industry is all set to face a moment of reckoning once again.
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