San Jose Fairmont Hotel Operator Filed for Chapter 11 Reorganization Today

San Jose Fairmont Chapter 11 FMT SJ LLC Fairmont Hotel Silicon Valley 170 South Market St.

Hotel Closes to Seek Management Partner for Landmark Downtown Property

“We will be back in 60-90 Days with improved finances and a new hotel management team,” rep says

San Jose — (5 March 2021) — FMT SJ LLC, operator of the landmark San Jose Fairmont Hotel, today filed for Chapter 11 reorganization and closed the hotel in order to find a management partner and extend the existing mortgage debt.

The hotel ceased operations, relocating the few remaining guests to rooms at nearby hotels at ownership’s expense.

“We know that by taking this difficult step we will come back a more vibrant hotel to the benefit of everyone in San Jose, including the vitality of the City’s downtown, nearby businesses, and Silicon Valley conventions in a post-COVID-19 world,” said the hotel’s representative Sam Singer. He said the hotel is expected to gear up for operations again in roughly 60-90 days.

Like virtually all in the hospitality industry, the hotel has suffered from the impacts of COVID-19, Singer said. As a result of the pandemic, all conventions for 2020 and 2021 have been cancelled, and occupancy throughout the pandemic has been less than 7%. The hotel lost at least $18 million in 2020 and is projected to lose at least another $20 million in 2021, according to the owner.

He also said he is optimistic that the hotel’s secured lender will work cooperatively to ensure the hotel comes back stronger after its reorganization and as the region and the nation come out of the pandemic.

When the hotel re-opens mid-year, ownership expects it will have a new manager/brand; one with the ability and willingness to infuse tens of millions of dollars of capital into the hotel and its operations, and a robust pipeline of future convention business for the hotel.  

The impacts of the pandemic have been significant, Singer said. “The owner is committed to a process that will ensure the hotel’s long-term viability and drive business both to the hotel and to San Jose’s important downtown and convention center,” he added.

The owner is guided by its goal of funding the hotel operations through the end of the COVID-19 pandemic. The debtor filed Chapter 11 to restructure the hotel’s business around three core objectives: (1) rejecting the existing hotel management agreement so that the owner can transition to a new hotel brand; (2) running a comprehensive process to solicit proposals from appropriate hotel brands who are willing to provide substantial exit financing for the hotel; and (3) extending the maturity date on its mortgage loan.

The hotel is a landmark 805-room property at 170 South Market St., San Jose, in the heart of Silicon Valley. The 20-story, two-tower hotel has 65,000 sq. ft. of state-of-the-art meeting and event space, three restaurants with bars, a café bakery, a fitness center, and a rooftop pool and gazebo. The hotel features grand ballrooms for large conferences and conventions as well as intimate spaces for smaller gatherings. 

Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of them; nor can we assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.

West Coast Commercial Real Estate News