These Charlotte-area hotels are seeking bankruptcy protection as Covid continues to pressure occupancy.
Aloft Charlotte Airport, owned by Aarna Hotels LLC, and Courtyard Charlotte Steele Creek, owned by Sri Vari CRE Development LLC, filed for Chapter 11 bankruptcy protection at the end of April.
Both bankruptcy petitions report assets of just over $10 million to $50 million — and debts in the same amount. Funds are expected to be available for distribution to unsecured creditors; both have up to 49 creditors.
An interim court order allows cash collateral to be used for expenses such as employees’ salaries and costs to operate the hotels.
“Our goal continues to be to find the best solution for all stakeholders and we believe that Chapter 11 allows us the opportunity to do so,” says AnujNarayan Mittal, CEO of Raleigh-based MJM Group.
That hotel group is part owner of both facilities.
The $28.3 million, 139-room Aloft hotel, at 3928 Memorial Parkway, was forced to close just two weeks after opening. Occupancy dipped as low as 20%, with Covid keeping its doors closed for months, he says.
The 118-room Courtyard by Marriott Steele Creek, located at 8536 Outlets Blvd., had to push its opening back until July 31. It cost $23.5 million to realize.
A third property that MJM has a stake in — a dual-branded hotel in north Charlotte — also filed for bankruptcy protection last August.
“This is 100% Covid related. We’re not seeing the rates that we need to get back on our feet,” Mittal says.
He says the hotel group’s hand was forced by creditors that refused to find an amicable path forward. For example, hotel notes for Aloft and Courtyard were sold to a national hotel ownership company that declared them in default and demanded outstanding loan amounts be paid within 10 days, Mittal says.
“People are looking for opportunities to crush people like us,” he says. “This is a favorable time for the lawyers and the hedge funds.”
Mittal said Friday he doesn’t expect to be able to save the dual-branded hotel in north Charlotte from an eventual sale. That facility consists of the Residence Inn by Marriott and Courtyard by Marriott, located at 9110 Harris Corners Parkway.
“That’s just out of reach,” he says. “It’s in the court’s hands now.”
He has a more positive outlook on Aloft and the Courtyard in Steele Creek, as more people become vaccinated and travel picks back up.
Occupancy is hovering between 45% and 50%, he says. Pre-Covid occupancy levels were about 75%
“These hotels were built to cater to corporate demand. We’re not seeing corporate demand return yet,” he says. “It’s been just a ghost town.”
That hospitality group also operates a Residence Inn in Steele Creek and a dual-branded Residence Inn and Fairfield Inn & Suites.
Mittal says the last year has been devastating to his company, but he can recover because he still has his health and loved ones.
“We’ve been able to do it once. We’ll just start fresh and build back in the years to come,” he says.