Marriott Loses 122 Properties in $11 Million Default on Payments

By Paul Riegler on 7 October 2020
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Marriott International lost 122 properties after defaulting on payments of over $11 million to Service Properties Trust, which owns the hotels. The hotelier’s failure to pay the shortfall triggered SVC’s termination rights, the company said on Wednesday.

This is the second major hotel default reported amidst the coronavirus pandemic.

The world’s largest hotel chain will see nine Marriott branded properties reflagged as Sonesta hotels on December 15, 2020, and 89 properties in the portfolio transitioned to Sonesta on January 31, 2021.  Service Properties Trust is in the process of selling off 24 Marriott branded hotels pursuant to an existing agreement with Marriott.

“Marriott failed to meet the termination threshold of 80% of owner’s priority return through August,” the company said in a statement in September.

The move comes on the heels of a similar default by InterContinental Hotels Group, which lost 103 hotels to Service Properties Trust in August.

Service Properties Trust currently operates two Marriott-branded hotels, two Springhill Suites, 12 TownePlace Suites, 35 Residence Inns, and 71 Courtyards across 31 states.

The owner plans to transition the properties to Sonesta International Hotels, to be reflagged under various Sonesta brands including Royal Sonesta, Sonesta, and Sonesta ES Suites.

Marriott had two weeks from the time of notification to cure the default.

At press time, Marriott had not responded to a request for comment on the announcement.

Sonesta was founded in 1937 and its past portfolio included such storied properties as the Plaza in New York City and the Whitehall Hotel in Chicago.  In addition to the Clift in San Francisco, the chain owns some 80 properties in seven countries, which fall into either full service properties such as under the Royal Sonesta brand, or limited service properties under the Sonesta ES Suites brand.

(Photo: Accura Media Group)

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