Wave of foreclosures strike California hotels: Bargains for guests?

California is already cursed with an unemployment rate -- 12.5% -- that is much higher than the national average. It is one of a handful of states (Nevada, Florida, Arizona are the others) that has been considered ground zero for the housing and real estate crisis. Now, you can add one more notch on the state's tightening economic belt: hotel foreclosures in California skyrocketed 27% in the first quarter of 2010.

Atlas Hospitality Group, a California company that is in the hotel selling biz, reports that foreclosures of hotels in the state are up to 79 properties from 62 at the end of 2009.

In an interview with Businessweek, Atlas president Alan Reay said, "If we look throughout the U.S., states like Florida, Nevada , Arizona and California were tied very closely to the housing boom and that was a big driver of the economy there. Hotels that are suffering the most are in areas with high unemployment."

The Atlas California report is filled with bad news for the state's hotel industry, concluding that 406 hotels are "either in default or have been foreclosed on."

The largest hotel to be foreclosed on, according to the survey, is the Marriott Hotel in downtown L.A. The 469 room giant was just sold to new investors.

Of the 79 California hotels foreclosed upon, says the report, only 7% - 9% have been resold by lenders. Not a good batting average by any measure.