Travel woes continue as multiple hotels file Chapter 11 bankruptcy

Two of the properties are owned by the Wyndham hospitality group.

Jun 17, 2025 - 11:16

Travel woes continue as multiple hotels file Chapter 11 bankruptcy

In the tourism and hospitality industry, the first six months of 2025 were dominated by a number of high-profile airline bankruptcies.

Following a wider restructuring that will take the budget airline private, Spirit Airlines (SAVE) emerged just four months after filing for Chapter 11 protection at the end of last year.

Competitor and fellow Florida airline Silver Airways was more down on its luck, and after months of reassuring travelers that it would emerge from its heavy debt load swinging, had to accept a $5.77 million stalking horse bid that will barely make a dent in the $500 million owed to creditors.

On June 11, Silver put out an ominous social media post telling anyone with a booked ticket to "not go to the airport" and seek any refunds from their credit cards as they were ceasing operations.

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'There was a lot of demand': Motel 8 sale precedes loan default

In the hotel space, there have been few big-name bankruptcies and a number of smaller ones. Throughout the spring, two Wyndham (WH) properties in California have needed to file for bankruptcy.

The 102-room Super 8 in the Livermore suburb east of San Francisco did so after defaulting on a $7.7 million loan that the State Bank of Texas gave it in 2022. In San Jose, a 204-room hotel complex is close to it after defaulting on a $21.7 million loan from Choice Hotels International (CHH) .

The latter is a motel complex located off of U.S. Highway 101 and includes a Wyndham-affiliated Super 8 and another property from Motel 6; the latter budget chain was acquired by Blackstone in September 2024, while the specific property was sold to Texas hotel investor Jagmohan Dhillon for $29.9 million in 2022.

"Blackstone being Blackstone, they sold at the right time in retrospect," Alan Reay, president of Irvine-based Atlas Hospitality Group and California hotel industry analyst, said to a local outlet. "There was a lot of demand for those Motel 6 hotels. The prices really got bid up."

Amid growing interest rates and high debt load, the hotel grew delinquent on its property taxes at the end of 2024.

A few big-name hotels and several smaller ones have filed for bankruptcy recently.
Image source: Universal Images Group via Getty Images

These hotels recently filed for bankruptcy

Another California hotel to recently file for bankruptcy is the University Inn & Suites in Berkeley. The 113-room is owned by Kubera Hotel Properties and defaulted on a $10.5 million loan that JPMorgan Chase (JPM) provided in 2019.

In court filings, the owners listed $18.25 million in assets and named weaker demand as the reason for its prolonged financial struggles. The next step is taking the property into foreclosure auction to recover debt owed to creditors.

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California's hotel industry has continued a downward slide when it comes to both traffic and investor interest. In 2024, the $3.36 billion in hotel deals marked a 10.4% drop to the fourth-lowest point in the last 15 years.

“A lot of the hotel markets that are primarily business-oriented, such as San Francisco, Oakland and San Jose, are struggling the most," Reay said in a separate interview with San Jose's Mercury News.