Tuesday, June 17, 2025
The hospitality industry in California is feeling the strain as three hotels in the state have recently filed for bankruptcy. With rising interest rates and growing debt loads, several establishments have been forced into default, marking a downturn in the state’s hotel market. Among the notable names, Super 8 in Livermore and a complex in San Jose have faced severe financial difficulties, ultimately leading to bankruptcy filings. As California’s hotel industry continues to falter, investors and owners are grappling with the implications of these defaults.
Rising Debt Leads to Hotel Bankruptcies
Two Wyndham properties in California are among the first to succumb to financial pressures. The 102-room Super 8 in Livermore defaulted on a $7.7 million loan from the State Bank of Texas in 2022. Meanwhile, a larger hotel complex in San Jose, which includes a Wyndham-affiliated Super 8 and Motel 6, faces a $21.7 million loan default from Choice Hotels International.
The San Jose property, located off U.S. Highway 101, was sold to Texas investor Jagmohan Dhillon in 2022 for nearly $30 million. However, despite growing demand for Motel 6 hotels, the rising interest rates and high debt have made it harder for these properties to maintain financial stability.
The Struggles Continue: University Inn & Suites in Berkeley
Another casualty in California’s troubled hotel sector is the University Inn & Suites in Berkeley. The 113-room hotel, owned by Kubera Hotel Properties, defaulted on a $10.5 million loan from JPMorgan Chase. The owners cited weak demand as the primary reason for their financial struggles, which were compounded by the state’s declining hotel traffic.
With assets totaling $18.25 million, the hotel is now headed for a foreclosure auction to recover the debt owed to creditors. The ongoing issues in the state’s hotel industry are having a ripple effect, with properties like the University Inn & Suites struggling to remain afloat in a challenging market.
A Downward Slide for California’s Hotel Industry
California’s hotel industry continues to face a downward slide, with both investor interest and hotel traffic on the decline. In 2024, the total value of hotel deals in the state dropped by 10.4%, hitting the fourth-lowest point in the last 15 years. Business-oriented hotel markets, such as those in San Francisco, Oakland, and San Jose, are struggling the most due to reduced demand and an overall cooling economy.
Experts suggest that the state’s high property prices, coupled with rising operational costs and interest rates, are making it increasingly difficult for smaller and mid-sized hotels to survive. The pressure continues to mount as more hotels face the possibility of default or bankruptcy in the coming months.
The Bigger Picture: Financial Uncertainty in the Hotel Sector
These hotel bankruptcies reflect a larger trend in the tourism and hospitality industry, where financial uncertainty and rising debt have caused widespread concerns. With the pandemic’s impact still lingering and interest rates continuing to climb, many hotel owners are left navigating a difficult landscape.
While some larger hotel chains may have the resources to weather these challenges, smaller properties and independent hotels are feeling the squeeze. The inability to keep up with rising debt is forcing more hotels into bankruptcy, particularly in high-demand tourist regions like California.
Conclusion: A Tumultuous Time for California’s Hotel Industry
California’s hotel industry is facing one of its toughest periods in recent memory. With rising debt, high-interest rates, and reduced demand, several properties have had no choice but to file for bankruptcy. As the industry adjusts to these economic realities, hotel owners, investors, and travelers will need to adapt to a changing landscape. While some larger chains may manage to survive, the challenges are clear for smaller operators who may struggle to keep up.
As the market continues to shift, California’s tourism and hospitality sectors will need to find new ways to attract visitors and maintain financial stability. The future of the state’s hotel industry is uncertain, but for now, bankruptcy and defaults are a growing concern for both business owners and travelers alike.
