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Luxe Rodeo Drive in Beverly Hills is closing, marking the first high-end hotel in Los Angeles to cease operations because of the impact of Covid-19.
Efrem Harkham, CEO of Luxe Hotels, informed employees in a letter that the 86-key hotel would shutter, according to the Los Angeles Times.
Harkham’s son Aron Harkham, president of Luxe Hotels, said the property got “caught up with the bad timing of the global travel market,” by remodeling just before the pandemic hit.
The future of the Luxe Rodeo Drive at 360 North Rodeo Drive seems uncertain. Aron Harkham said the company is considering “alternative options” for the property given the drop in demand for hotel rooms. Nationwide, hotel occupancy is around 50 percent, a little higher in L.A., according to a recent STR report.
Luxe Hotels operates three locations in L.A. and New York. Harkham bought the Rodeo Drive property in the mid-1990s.
The Luxe Rodeo Drive probably won’t be the last of Southern California’s many high-end hotels to close amid the pandemic. Around 60 hotels in L.A. and Orange counties are more than 30 days behind on their mortgages, according to the Times.
The rate of delinquencies among commercial mortgage-backed securities tied to hotels shot up from 13.6 percent in May to 21.6 percent in June. For comparison, 12.8 percent of retail CMBS loans were delinquent in June.
Some hotels have kept their doors open with federal loans through the Paycheck Protection Program. Some lenders have also worked with borrowers over loan payments and delinquencies. [LAT] — Dennis Lynch
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