While overall travel and hotel booking numbers continue to rise and in many cases exceed pre-pandemic levels, not every hotel is able to profit from growing travel demand.
Rising labor and operating costs, on top of fluctuating consumer spending sentiments in certain markets, led to a number of hotel and hospitality group bankruptcies across different spending classes since the start of the year.
In June, two Wyndham Group properties in California filed for Chapter 11 protection: The 102-room Super 8 in the Livermore suburb east of San Francisco did it after defaulting on a $7.7 million loan the State Bank of Texas granted it in 2022.
After owner Allegiant Travel Company filed for Chapter 11 protection in May, the 785-room Sunseeker Resort Charlotte Harbor resort in southwestern Florida was purchased and rebranded by Hilton (HLT) ; the hotel had been operating at just 35% capacity for months.
Travelers with booked stays arrive at LuxUrban hotels, find shuttered doors
The latest bankruptcy news in the hospitality space concerns the hotel group LuxUrban; the parent company was founded in 2017 and at its peak operated over 1,000 rooms in New York, Miami, New Orleans, and Los Angeles.
Some of these properties continue to operate, while others were shut down or resold.
While filing for Chapter 11 protection usually indicates that the company is looking for financial help to avoid a shutdown, hotel visitors who arrived at New York properties like The Tuscany in Midtown Manhattan and Hotel 27 in the Chelsea neighborhood reported finding a printed sign on the door telling them that the hotel was closed.
Related: An iconic ‘airplane hotel’ is left abandoned after bankruptcy
“We’re young, and we’re not rich,” Eliza Simopoulous, who arrived in New York from Greece with her brother and suddenly found herself having to find last-minute accommodations at prices of over $1,000 per night, said to the New York Times.
Hotel housekeeping workers at the properties similarly described coming in to work to find that managers had not come in, with some texting to say they had resigned.
The hospitality group had filed for Chapter 11 protection in the U.S. Bankruptcy Court in the Southern District of New York on Sunday, Sept. 14. It is a public company operating under the LUXH ticker.
Image source: LuxUrban
Had a LuxUrban hotel booked? Here is what you need to know
The bankruptcy filings state that LuxUrban and any of its subsidiaries want to continue operating the properties as debtors-in-possession under sections 1107 and 1108 of the U.S. Bankruptcy Code.
The bankruptcy filing came after the company defaulted on minimum payments on a number of its unspecified debts.
More on travel:
- United Airlines CEO gives stark warning on Olympic Games
- Another regional airline cancels all flights, no refunds
- US government issues sudden warning on Switzerland travel
- Another country just issued a new visa requirement for visitors
As of the morning of Sept. 19, the websites for hotels like The Tuscany were still allowing travelers to make reservations through their booking systems, while the last guests with booked stays were waiting out their stays, despite staff not being around to provide cleaning.
At the start of the week, some guests with bookings at the hotel reported being able to check in but found that no staff was around to providence guidance beyond that.
“I was able to check in about four nights ago,” California resident Pete Sridarom said to CBS. “I noticed there wasn’t anyone
Related: Iconic New York castle hotel files for Chapter 11 bankruptcy
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