Empty Hotels Get Second Life as Tiny Apartments During Pandemic

Quote by Jonathan Needell  |  The Wall Street Journal

December 22, 2020

Investors are buying hotels and turning them into rental apartments, in the latest sign of how the Covid-19 pandemic is changing the American real-estate market.

These buyers are trying to take advantage of the hospitality industry’s crisis by taking over struggling or foreclosed properties at bargain prices. They are also looking to profit from rising demand for cheap housing from households forced to downsize during the recession.

The small but growing number of hotel conversions—some properties are also being turned into offices—is a symptom of the turmoil the pandemic has caused in the hotel sector. Many properties are shut down or running steep losses because of a drop in travel.

The share of hotels with securitized mortgages that were delinquent on their loans was 19.66% as of November, up from 1.52% a year earlier, according to Trepp LLC. Even before the pandemic, a surge of hotel construction over the past decade had left some cities with a room glut.

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