Tahoe Ritz Carlton Checks Out, Defaults

As the first step towards possible foreclosure, the new Ritz Carlton Hotel in Lake Tahoe has gone into default. This is not so much a reflection on the Ritz Carlton, but on what's going on in the entire Tahoe region. The luxury hotel opened in December and charges anywhere from $249 to $4,000 a night--perhaps a bit steep in these time of recession when most people are looking for affordable deals.

The Tahoe hotel's developer, East West Resort Development, put nearly $1 billion worth of Northstar real estate development into bankruptcy reorganization; having built hundreds of condominiums and townhomes in the area around the Northstar-at-Tahoe ski resort.

Even as the economy recovers, consumers are still wary of spending on such extras as new vacation townhouses and timeshares, after enduring a long winter from the collapse in the real estate market.

As reported in the Sacramento Bee: "The hotel is behind on $18.7 million in payments on loans totaling $157 million, according to a default notice filed in Placer County by Bank of America."
Yikes. A default notice is a precursor to foreclosure, although the process gives the borrower time to pay the debt and hold on to the property.

The casinos in Tahoe have been taking a beating from California's Indian casinos, and spiking gas prices are another factor in keeping tourists away. So maybe investing in a luxury hotel in a depressed area -- and during a time when most people are still tightening their belts -- wasn't the best business maneuver.
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