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PKF Says Refinancing Helps Hotels Limit Loan Problems in Tough Times

ATLANTA-Faced with declining revenues, 19.2% of hotels were unable to cover their interest obligations in 2001, according to a new study by locally based PKF's Hospitality Research Group. That is up from 16.4% the previous year. Refinancing kept the increase from going higher.

By Marita Thomas | Updated on October 24, 2002

ATLANTA-An estimated 19.2% of hotels in the United States were unable to meet their mortgage interest obligations in 2001, according to a new study by locally-based Hospitality Research Group, a division of San Francisco-bassed PKF Consulting.

While this is an increase from 16.4% in the previous year, “the percentage would have been much higher had hotel managers not reduced interest expenses by an average of 9% during 2001,” Jack Corgel, managing director of HRG, says in the report.

Corgel expects the number of deficient properties, those with insufficient operating income to cover interest expenses, to rise again this year, then “noticeably decline in 2003 as hotel markets recover.”

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