Once a Hotel Suite, Now an Office Space

As the hospitality industry grapples with a severe downturn, owners are turning hotels into offices, schools, emergency housing, wedding halls or homeless shelters.


By C. J. Hughes

Like many hotels pummeled by the pandemic, the InterContinental Times Square is trying to hang on.

After tourists stopped arriving this spring, the 607-room property transformed into housing for doctors and nurses treating coronavirus patients. When they checked out, the high-rise began offering blocks of rooms as office space. And with its reopening this month, the InterContinental will again play office landlord, this time on a suite-by-suite basis.

“We’re trying to be creative,” said Gul Turkmenoglu, the general manager, “and hope our ideas take off.”

Across the country, as the hospitality industry grapples with a severe downturn, hotels have been trying to reinvent themselves — as schools, emergency housing, wedding halls or homeless shelters — even as the new uses may come up short on revenue.

There are signs of financial distress. In New York, 44 hotel loans backed by bonds totaling $1.2 billion are delinquent, according to September data from Trepp, an analytics firm. In second place was Houston, with 39 delinquent loans at $682 million, followed by Chicago with 29 at $990 million.

Though a foreclosure would not necessarily cause a hotel to close, many analysts do not expect the industry to fully recover till 2023.

“Generally speaking, every hotel in America has lost 20 to 35 percent of its value in the last six months,” said Keith Thompson, a principal of the hospitality group at the brokerage firm Avison Young, which is starting to list distressed hotels at steep discounts.

Government efforts to house people in need have picked up some slack. New York, for instance, leased 11,000 rooms in hotels from April to July for medical workers who did not want to infect their families, as well as Covid-19 patients who could not isolate properly at home. One was a Hilton Garden Inn on West 37th Street, where three patients died in April after being discharged from hospitals.

This spring, New York also leased 63 of the city’s 700 hotels to house homeless residents, who are vulnerable to the coronavirus in open-layout shelters. The city pays $120 per room per night to those hotels, which received 9,500 people during the pandemic, most of whom are still there, a spokeswoman for the Department of Homeless Services said.

Included are outposts of chains like DoubleTree and SpringHill Suites, but also Kixby, a 195-room boutique property on West 35th Street with a “mixology” bar in the lobby.

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