Affected by the new crown virus pandemic, one of the most famous hotels in Manhattan, New York, the Hilton Times Square Hotel announced that it will be closed indefinitely. The closing of this iconic hotel hints at the difficult living conditions of the New York hotel industry during the epidemic.
According to the "Wall Street Journal" report on September 2, in a public document submitted to the New York State Department of Labor on Monday, the 478-room luxury hotel said it would be permanently closed and would lay off 200 employees, effective October .
A spokesperson for the hotel’s actual controller, Sunstone Hotel Investors Inc., stated in an email that the hotel submitted an application to indicate that the layoffs may last more than six months, and this application " It is not meant to imply that the hotel will be closed permanently.” He added, “The final reopening date is not yet clear. This date will be affected by negotiations with lenders and market conditions.”
It is reported that the Hilton New York Times Square Hotel is a franchise property of the Hilton Hotel Group. Affected by the epidemic, the hotel closed in March this year and allowed employees to take unpaid leave. Today, the closure of this hotel is seen as the "newest chapter" of the new crown pandemic and economic recession, how to subvert the once prosperous New York hotel industry.
As the epidemic lockdown keeps everyone at home and global business travel is frozen, hotels have temporarily closed their doors, suspended or fired employees. The hotels near Times Square in New York are particularly dependent on overseas tourists and Broadway performances. The new crown virus pandemic has almost suspended all cross-border travel, coupled with the temporary cancellation of Broadway performances, leaving hotels in the area in desperation.
The Wall Street Journal pointed out that in fact, when the epidemic caused a sudden drop in bookings in March this year, Manhattan’s hotel market was already facing the pressure of rising operating costs and oversupply of rooms. The epidemic was just the “last straw” that overwhelmed them. ".
In June of this year, the Times Square Edition Hotel in New York, which is adjacent to the Hilton Hotel, officially announced that it will be permanently closed on August 13, 2020, and this luxury hotel has only been opened for 18 months. Bloomberg once reported that before the epidemic, the financial crisis of the EDITION had already appeared. In December 2019, a group of creditors cancelled the foreclosure of the property mortgage, and the outbreak of the epidemic became the last straw that crushed the New York Times Square Edition Hotel.
The Hilton Times Square Hotel has also been under financial pressure. The Sunstone Hotel Investment Company controls the property under a land lease agreement. A mortgage of $77.2 million will expire in November. This year, the company reduced the value of the property to $61.3 million, but it is still insolvent. Sunstone Hotel Investment Company stated in a public document in August that the hotel has not repaid the mortgage since April and is currently discussing possible solutions with lenders, including the transfer of the property.
At the same time, the rent paid by Sun Stone Hotel Investment Company to the owners of the building's land rose sharply in May. The company stated in the document that since March this year, the company has not paid the ground rent, and has received a notice of breach of contract from the landlord, and is currently negotiating a lease agreement.
Data from the data company STR showed that in early April, the hotel occupancy rate in New York City fell to only 19.6%, but it has since recovered.
Today, the Hilton Times Square Hotel is one of the first hotels to say that they will not reopen in the uncertain future. Previously, several mortgage defaults have occurred in this once-prosperous area, and some hotels have been partially converted into homeless shelters to compensate for the decline in tourist demand. Some analysts predict that as many as 25,000 hotel rooms in New York may never reopen.
