US hotel loan defaults could rise on falling leisure stays, climbing costs
As the surge in travel after the pandemic wears off, demand is shifting away from pricey leisure stays and towards lower-rated group business travel
U.S. hotel owners could see greater pressure on their ability to service the loans backing their properties, as a decline in leisure stays coupled with rising costs are expected to pinch their profits.
Key takeaways
- Leisure travel will likely fall further in the event of an expected recession in the first half of 2024, the Fitch report noted;
- Several hotel owners defaulted on loans backing various hotels in 2020, when travel plummeted at the start of the coronavirus pandemic;
- Rising labor, energy and insurance costs will further pinch the wallets of hotel owners, according to Fitch, adding to their risk in making interest payments.
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