A weak economy isn’t all bad. One theme I see everywhere I travel is brand new motels and hotels. Older motels and hotels are being driven out of business and replaced with newer properties. I don’t know anything about the Park Plaza Hotel in Oakland, California, but if they can’t even get a flag (an association with a motel/hotel chain) it must be in pretty sad shape. According to Tripadvisor, this one used to be a Best Western.
The latest high-profile hotel to suffer a default is Oakland’s Park Plaza Hotel, located at 150 Hegenberger Road, near Interstate 880.
The 189-room hotel’s lender, San Joaquin Bank, filed a default notice on a $14 million loan for property owner Oakland Airport Plaza Hotel LP.
An array of financial woes have beset the Park Plaza, said Ram J. Prasad, principal partner for the hotel owners.
"The main problem we are facing is occupancy," Prasad said. "It has been one thing after another."
The problems began in mid-2009. Among the travails: Federal Express cut the number of its pilots that stay at the hotel; a new Holiday Inn opened across the street last summer; Park Plaza is an independent hotel without access to a national reservation system; and the hotel captures less visitors from nearby Oakland airport.
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"People can’t get financing for their hotels when their loans come due," said Jessic Ruderman, senior analyst with Real Capital Analytics. "Sometimes the hotels can’t generate enough revenue to make the loan payments."