Dallas-Fort Worth's Hotels Heading to Bankruptcy?

September 3rd, 2009 by Reed Allmand

According to an article in the Dallas Morning News, Dallas-Fort Worth‘s hotel industry has hit a rough patch, occupancy rates are way down and if things don’t improve soon some area hotels may be heading to bankruptcy.

The article said:

“For the first six months of 2009, demand was off by 10.9 percent, occupancy by 12.4 percent, average daily room rate by 8.3 percent and revenue per available room by 20 percent from the same period a year earlier,” the report says.

“We haven’t seen room rates drop like this since the ’80s,” said Lisa Swain, a Dallas-based associate with PKF, a hospitality research and consulting firm. “We knew demand was coming down, but rates have been severely impacted.”

Unfortunately for the hotel industry, occupancy rates may drop even more and some hotels may face bankruptcy or even close down completely.  Hotels don’t just rely on the family vacationers, the bulk of their money comes from business travelers.  Business travelers are literally the bread and butter of the hotel industry and other travel related businesses.  Remember what happened to the airlines?  Many needed to file bankruptcy after facing huge drop-offs in passengers and the industry is looking at another downturn which some may not survive.  Well, if business travelers don’t fly, they also won’t be booking hotel rooms either, leaving some already weakened hotels even more vulnerable to bankruptcy.  Unfortunately, with the contraction in credit, some of those hotels may not secure the funding needed for a Chapter 11 bankruptcy that includes restructuring–those hotels may face liquidation.  Some cities such as Dallas-Fort Worth could be hit hard because a few hotel bankruptcies that end in liquidation could send thousands of workers into unemployment.  Hopefully that won’t happen; but it is a possibility.

Source: Dallas Morning News