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> The hotels themselves are operated by other companies, and when Park Hotel defaults on a mortgage and walks away from the property, it means ownership of the
by the_mitsuhiko 3y ago
> The hotels themselves are operated by other companies, and when Park Hotel defaults on a mortgage and walks away from the property, it means ownership of the property will change. That’s all it means for the hotel. The operating company remains the same.
I'm curious about this part. Is that actually true? That sounds like the contract that the management company has is with the lender to begin with rather than Park Hotels? Or is the contract structured in a way that even if Park Hotels sells, the new owner needs to honor that existing contract?
- Incipient 3y agoI would expect there is some clause in their contract about novating it on transfer of the property ownership. Properties do get transferred, and it would be beyond insane not to have such a clause. It's not as if the operator of thy hotel can just rent another space down the road. But not my industry, just seems like it would be reckless from the outside.
- the_mitsuhiko 3y agoI'm sure the contract has terms that determine what happens on a sale, return to lendor or whatever else is going on. But I'm not convinced that the assumption that "nothing changes for the management company" is such an obvious assumption.