Two East Bay hotels that boast prominent locations are facing foreclosures on mortgages for the properties, making the operations some of the newest casualties of a widening economic debacle.
The owners of the Sheraton Pleasanton Hotel, a 170-room facility in Pleasanton next to Stoneridge mall; and the Coliseum Suites, a 293-room hotel near the football-baseball-basketball complexes in Oakland, have tumbled into defaults on their mortgages, according to Alameda County property records.
Separate default proceedings are under way for the loans on the two properties:
"The whole market is a disaster," said Richard Swig, a principal executive with RSBA & Associates, a partner in the AG Inn at the Mall organization that owns the Sheraton Pleasanton. "It's a bloodbath."
The problem for the Sheraton? Business
"The Tri-Valley market depends on corporate travel," Swig said. "The country has been hit hard, but the Pleasanton market has been hit harder. You have companies reducing travel and their business activity, but you also have companies going out of business entirely in this area."
Washington Mutual is preparing to vacate a huge office complex in Pleasanton as part of an elimination of 1,200 jobs in that city by JPMorgan Chase, which also is cutting 400 WaMu jobs in San Francisco. E-Loan has cut 400-plus jobs in Pleasanton. Some insurance companies have eliminated jobs in the area. Numerous mortgage firms have gone out of business.
And companies that continue to be huge employers in the area such as Chevron, AT&T and Safeway — which has its headquarters next door to the Sheraton — have curbed their meeting activity.
"Everyone is in an austerity mode," Swig said.
Hotel occupancy levels in the Pleasanton market are down about 28.5 percent during the last four weeks or so, Swig said. Plus, hotels have been forced to lower their room rates to attract as many visitors as possible. The two factors have coalesced into steep revenue declines.
Revenue for Pleasanton area hotels during the latter months of 2008 was down about 36 percent. But during the first 10 days of January 2009 compared with the same period, revenues have plunged 45.8 percent.
"Over time there will be an impact on the city's revenues," said Pamela Ott, Pleasanton's city economic development director.
It was not immediately clear if the property owners would be able to extricate themselves from their respective financial binds.
The hotel in Oakland is empty, is fenced off and has been victimized by vandals, James Ahn, managing member of hotel lender JCRA, said in a declaration that was filed on Dec. 5 with the bankruptcy court.
The Sheraton Pleasanton, in contrast, continues to operate, has an excellent location and was bolstered by a $3.5 million renovation over the last 12 months. And the owners are in daily negotiations with the lender.
"This wasn't about bad management, it's about the downward spiral the whole country is in," Swig said. "We have a great location and a great property. But that doesn't matter if companies are not traveling, or holding meetings, or going out of business."
Reach George Avalos at 925-977-8477 or email@example.com.