Furloughed hotel workers face ‘tremendous anxiety’ about feeding their families, buying prescription drugs, and meeting their daily needs, says union. The Fontainebleau hotel put Miami Beach on the map in the 1950s when the sprawling oceanfront property opened its doors for business. Now it is part of a far less glamorous trend — a wave of hotel owners needing a break on billions worth of property debt as the deadly coronavirus pandemic cripples business.
“No. I’m not surprised,” said Jodi Schwimmer, a partner at law firm Reed Smith, about hotel owners starting negotiations with their lenders about potential debt relief a month after nationwide lockdowns took hold to stop the pandemic’s spread in the U.S.
Owners of many trophy hotels had piled on a “tremendous amount of debt,” Schwimmer said, adding that Reed Smith
represents a number of owners whose debt levels no longer look tenable after revenue plunged by as much as 80% to 90%
in recent weeks. “It’s just not sustainable in the current structure.”
Debt on the Fontainebleau alone accounts for $975 million, the biggest slice, out of $6.6 billion of hotel debt packaged into
property bond deals that transferred in April to “special servicing,” according to data from BofA Global Research.