Image by Pete Linforth from Pixabay
KEY POINTS
- The Trump International Hotel recently laid off 160 employees
- The hotel's occupancy rate in recent weeks was pegged at 5%
- President Trump admits the coronavirus pandemic is "hurting me"
The coronavirus pandemic reportedly has interrupted plans by the Trump Organization to sell the lease on its Washington hotel until banks and investors get back to normal. Plans to sell the lease were announced in October.
The Washington Post reported Tuesday the proposed sale of Trump International Hotel, which is housed in the Old Post Office Pavilion, was delayed amid a slowdown in the commercial real estate and hospitality industries prompted by COVID-19. The lease is held by the federal government.
"We have toured only the most discerning buyers and are proud to be representing such an iconic asset," Jeffrey Davis of commercial real estate firm JLL, told the Post. "Trump International Hotel, Washington, D.C., is one of the finest hotels anywhere in the world and we look forward to working with the Trump Organization on finding the right fit once the industry is back up and running."
Seven of the Trump Organization's 10 top-grossing properties were closed as of Monday and those still open were at a fraction of their capacities. Some 550 hotel workers have been laid off by the company, the Post reported. Recent occupancy at the Washington hotel was pegged at 5%, and union workers reported 160 workers there had been laid off.
"I'm very unleveraged in everything, so that's good," President Trump told reporters last week. "But is it hurting me? Yeah, it's hurting me, and it's hurting Hilton, and it's hurting all of the great hotel chains all over the world."
The $2.2 trillion economic relief package signed last week specifically prohibits Trump, his businesses and his family members from benefiting from the $450 billion set aside to help businesses survive the pandemic.
Layoffs have been widespread throughout the hotel industry with major chains like Marriott and Hilton furloughing or laying off tens of thousands of workers.
Experts predict the slowdown in commercial real estate to last at least six months.
"Transaction volumes are down and will be down until we get a floor under us," Douglas Harmon, chairman of capital markets at Cushman & Wakefield, said in a webcast with the commercial property firm's clients. "Within the spectrum of potential asset value diminution, every asset class is being affected.
"Investors and lenders are reassessing the market, which will leave some sellers without a way to divest," said Andrew Rybcznski, a managing consultant with the CoStar Group. "For many this won't be an issue, and holding through the slowdown is an option. For some, that won't be possible, as in the case of owners with upcoming balloon payments, 1031 exchange deadlines, or who are facing a sudden loss of tenant income. Those sellers will need to make their properties more attractive in order to entice sellers."
