Another local hotel has had foreclosure proceedings initiated against it, this time the Montelucia Resort in Paradise Valley (previously La Posada prior to its expensive gut rehab). According to the Business Journal, lender Eurohypo AG filed a notice of trustee sale at the end of January to foreclose on the hotel and unsold high-end residential villas and casitas being sold as part of the development by developer Crown Realty & Development. The hotel re-opened in November 2008 following its renovation and was undoubtedly hurt by the severe downturn in home sales at all price levels and the increasingly anemic hotel market in Phoenix.
The amount of the promissory note secured by the deed of trust in the trustee sale is $180 million - clocking in at more than twice the size of the W Hotel Scottsdale foreclosure initiated earlier in January that briefly was competing for the largest Arizona foreclosure of the year. Scott Klundt of Quarles and Brady is again acting at trustee in the sale - having also been appointed as trustee in the W Hotel proceedings. Like the W, the Montelucia will remain open during the proceedings and operations are not expected to be affected.
As mentioned, the Phoenix metro hotel industry has been hammered by the downturn in consumer spending, clocking in at an 11.2% occupancy and 8.3% RevPAR decline from 2007 to 2008 - the largest drop in both categories of the top 25 metro areas in the U.S. Not a pretty picture for a city that relies on tourism and its service sector so heavily.
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