Will Dream NYC's Financial Woes Affect You?
So, we knew Dream NYC was having some major financial issues. A $100 million loan secured by the hotel "was put on a special servicer status" a few months ago which usually does not necessarily mean that the loan is going to default. But in this case, it did: National Real Estate Investor reports today that the hotel actually defaulted on that $100 million loan. Alright then. So now what?
An excellent article over at Budget Travel outlined exactly what it means for the guest when the hotel you've booked is in major financial trouble. Quick summary: in almost all situations whether a hotel has defaulted on a loan or is actually in foreclosure it means absolutely nothing:
As Joe McInerney, president and CEO of the American Hotel & Lodging Association, puts it, hotel guests don’t have much to worry about. "When a hotel is in foreclosure, it's business as usual from the guest's point of view," says McInerney. "All commitments are honored. If new operators have taken over, it's generally a seamless procedure."
The BT article goes on to explain what happens when a bank takes possession of a hotel recommended reading, for sure but in most cases when a hotel is having serious trouble, you don't see much from the guest side of things unless there is some sort of crazy political owner vs. management debacle going on (a la what some people are saying went down with Four Seasons Aviara).
Uh, we're still gonna keep our eye on Dream, though.