Hotel Group: COVID Impact on Travel 9X Worse Than 9/11; as Queen Mary Operator Files Chpt 11
According to a report by the Long Beach Post, the Singapore-based Eagle Hospitality Trust, the operator of Long Beach's Queen Mary, has filed for chapter 11 bankruptcy protection, placing the city's landmark on a perilous cruise.
Why it matters:
Since the start of the pandemic, the hospitality industry has been in crisis mode, and cities like Long Beach that rely on hotel taxes from tourism and events have seen a drop in revenue. COVID has shot a $30 million hole in the city's budget. Plus, according to the American Hotel and Lodging Association, a trade group that represents the hospitality industry, said in a report that "direct state and local tax revenue generated from hotels fell by one-third in 2020 and will not rebound until 2023".
The big picture:
The AHLA wrote in its annual "State of the Hotel Industry" report that the financial fallout of the COVID-19 pandemic "has been nine times that of 9/11."
AHLA anticipates business travel to lag at least 85% through April and don't expect travel to return to 2019 levels until 2024.
The AHLA forecast that hotel occupancy to average just 52%, compared to 66% in 2019.
In May 2020, the Queen Mary's operator Urban Commons issued a report stating the ship generates $93.7 million in "economic output," or value, for the city, per Signal Tribune.
Eagle Hospitality Trust's bankruptcy documents obtain by LBP state that the company is drowning in $500 million in debt.
Crash Course: Queen Mary
The City of Long Beach owns the stationary ship, but Urban Commons has a 66-year lease to operate the old cruise ship and develop the adjacent land around it.
In 2017, a survey conducted by naval architects and vessel specialists found that the ship is in such a terrible shape that the Queen Mary would need at least $289 million in repairs, per LA Times.
In 2019, the Queen Mary's operator Urban Commons created Eagle Hospitality Trust and listed the company on the Singapore Stock Exchange to raise funds for its US-based projects like the $250 million Queen Mary Island project.
The City of Pasadena sued Urban Commons for failure to pay back taxes, per the LA Daily News.