More Hotels Facing an Uncertain Future - NYTimes.com - 1 views
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before the recession is over, the number of hotels in bankruptcy or foreclosure could rise above the 2,000 or so reached in the industry’s last big downturn in the 1990s.
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Since these hotels have greater fixed operating costs because of their extra services and larger staffs, they need higher occupancy rates just to break even. This is compounded by what many analysts have called the “A.I.G. effect,” as companies worry about public or regulatory scrutiny if their employees stay at lavish properties or hold events there.
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Although the troubled economy has hit hotels across the United States, some areas have it tougher than others. MGM Mirage and Harrah’s Entertainment own 19 casino hotels on the Las Vegas Strip. Harrah’s delayed construction on a hotel tower and has been able to refinance its debt over a longer period to reduce its payments. MGM recently sunk $200 million into CityCenter, a mixed-use project under construction, after its development partner skipped a payment. Other Las Vegas properties are struggling, too. The Ritz-Carlton, Lake Las Vegas spent much of 2008 in Chapter 11 and was bought last month by its third owner in just over a year.