SAN JOSE — The estimated worth of a bankrupt and shuttered resort that’s an icon in downtown San Jose has slipped, recent proof of the financial injury unleashed by the coronavirus on the battered lodging sector.
The proprietor of the downtown resort, generally referred to as the Fairmont San Jose, filed for chapter in March 2021 in an effort to reorganize its shattered funds, a court docket case that’s approaching an obvious endgame.
Someday in July, a U.S. Chapter Courtroom is slated to resolve whether or not to verify a proposed plan to overtake the downtown San Jose resort’s funds.
The decision of the court docket case may result in a reopening of the resort someday this summer season.
Situated at 170 S. Market St. in San Jose, the Fairmont resort closed its doorways final March across the identical time its proprietor filed for chapter.
Individually, the worth of the 805-room San Jose resort has tumbled, in line with an appraisal performed across the time of the chapter submitting.
The slumping worth of the resort is a reminder of one of many some ways the coronavirus has eviscerated the lodging market, particularly for accommodations that rely upon conventions and enterprise vacationers.
Previous to the outbreak of the coronavirus, an appraisal in June 2019 positioned the Fairmont San Jose’s worth at $267.6 million, or roughly $332,400 a room.
In March 2020, an appraisal by LW Hospitality Advisors got here up with a worth of $261 million, or roughly $324,200 a room for the downtown San Jose resort.
The newest identified appraisal, performed on behalf of the principal mortgage lender for the resort, an affiliate of Colony Capital, decided that the resort as of March 2021 was valued at $220.4 million, or $273,800 a room, in line with info compiled by Trepp, which tracks and analyzes actual property and finance traits.
“What we’re seeing is the COVID impact on accommodations,” stated Alan Reay, president of Atlas Hospitality Group which tracks the lodging market in California. “We’re seeing some 25% reductions in worth for some accommodations.”
Within the case of the Fairmont San Jose, the resort’s present appraised worth has fallen 15.6% in comparison with what it was in March 2020, on the outset of the coronavirus, and is down 17.6% in contrast with what it was in mid-2019, which was months earlier than the outbreak of the lethal bug.
Plus, the approximate per-room worth stands in stark distinction to the costs being commanded by accommodations positioned in California’s high locations for leisure vacationers.
Among the many mega-deals for California accommodations — which all are in big-time vacationer facilities:
— Ventana Huge Sur, a 59-room resort tucked away within the coastal mountains excessive above the Pacific Ocean in Monterey County, was purchased on June 3 for $148 million by Hyatt Resorts. That labored out to a jaw-dropping $2.51 million a room — or 11 instances the per-room appraised worth of the Fairmont San Jose.
In April 2021, the Montage Healdsburg, a 130-room resort in Sonoma County, was purchased for $265 million, or $2.04 million a room.
In 2019, Montage Beverly Hills, a 201-room resort was purchased for $415 million, or $2.06 million a room.
The Ventana Huge Sur deal represents an all-time report excessive worth on a per-room foundation for a California resort, in line with Reay.
The accommodations going through the largest challenges are these which can be just like the Fairmont San Jose, in addition to the overwhelming majority of accommodations within the South Bay, San Francisco, the East Bay, and Los Angeles.
“The Fairmont San Jose is a giant property, and it’s closely reliant on the conventions and assembly enterprise and on enterprise vacationers typically,” Reay stated.
These challenges will persist even when the resort manages to safe court docket approval of its monetary reorganization and to reopen this summer season as envisioned.
“Conference and enterprise journey accommodations would be the final sector of the resort market to get well,” Reay stated. “You don’t simply out of the blue flip the change and are available again to conferences and conventions for 1,000 individuals.”