Banks and lenders have filed a foreclosure suit against the Palmer House Hilton, one of the most iconic hotels in the city of Chicago, leading many to speculate whether the famed property will be next to shutter.
According to the Chicago Sun-Times, the hotel’s owner – Thor Equities, which has a management contract with Hilton Hotels to operate the hotel – was accused in a Cook County Circuit Court lawsuit of defaulting on its mortgage.
Thor Equities owes $333.2 million on the mortgage according to Wells Fargo Bank, a trustee for the holders of securities that include the Palmer House loan and the entity that actually filed the suit.
The Palmer House, with one of the most ornate lobbies of any hotel in the country, is one of the most iconic hotels in Chicago and the city’s second-largest lodging property. It was more than 100 years old. The Palmer House has been closed for almost five months because of the coronavirus pandemic.
The hotel is just steps from Michigan Ave. three blocks from Lake Michigan, and just two miles from McCormick Place, the largest convention center in the nation. But that’s part of the issue – like every big city in the country, Chicago has lost a copious amount of conventions and business travel.
According to the Sun-Times, the next hearing on the case is scheduled for February 2021, although Thor was expected to provide its response by Sept. 10 to the request for a receiver.
The coronavirus has forced many small and midsize lodging properties to close, but the large, upscale hotels are starting to come under pressure due to lack of demand. Earlier this week, Hilton announced it was closing its hotel in New York City’s Times Square, arguably one of the most well-located and usually sold out hotels in the world.
The American Hotel & Lodging Association has said one in four hotel loans nationwide are more than 30 days overdue and four in 10 workers in the industry are unemployed.
Michael Jacobson, CEO of the Illinois Hotel & Lodging Association, told the newspaper that huge convention hotels such as the Palmer House will survive, in part because the properties can’t easily be converted into something else, such as condos. But he said he’s fearful of smaller operations that rely on leisure travelers. “There are some of those we might lose permanently,” he said.
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