The Queen Mary, crown jewel of downtown Long Beach’s once flourishing commercial corridor, may have a different future as Eagle Hospitality filed for bankruptcy last week. Eagle Hospitality also owns 26 additional hotels per the LA Times.
“The 85-year-old former ocean liner-turned-floating hotel has been suffering, like the rest of the nation’s hotel industry, from a dramatic drop in demand due to the COVID-19 pandemic,” the LA Times reported.
Being closed since May doesn’t do the tourist attraction any good. Although residents can still gaze at its majesty from the boardwalk, the business leaders are finding a hard time monetizing it. Holiday months such as the month of October prove to be high-revenue windows that Eagle Hospitality missed this year. The well-known Halloween attraction, Shipwreck, for example, reels in over a hundred thousand paying customers during the month’s length.
The final plans for the Queen Mary Ship will ultimately be decided between the city of Long Beach—who owns the vessel—and Eagle Hospitality. The bankruptcy filing could be a foreshadowing of a wave of closures in the hotel and hospitality industry.
Representatives of parties involved were not available to make any comment on the matter, however, Alan X. Reay, founder of Atlas Hospitality Group, added “The hotel market has been completely devastated by the COVID pandemic, and 2020 will go down as the worst-performing year ever for the U.S. hotel market.”
“Eagle Hospitality may be an early indicator of what is to come in 2021 as certain lenders decide to pull back from deferring payments or where they are concerned that giving more time will only erode values further,” he said.
There were only two hotel companies with more than $50 million in liabilities that filed for bankruptcy last year. Even though those numbers are low, it was still the most since 2012. And experts say 2021 could see an increase but aren’t betting on it reaching 10 bankruptcies like in 2009.
Queen Mary Island
Urban Commons, the real estate investment and development firm that created Eagle Hospitality Trust, was embarking on a major renovation of the ocean liner and its surrounding land. A lot was hinging on this development as it was going to include a robust entertainment and retail section to fund much of the ship’s maintenance. The plan was valued at $250 million and it was supposed to transform the bland oceanfront into Queen Mary Island.
Fast forward to March 2020 and the pandemic struck. By the time May rolled around the ship was forced to close and that brings us to present day. Retail is operating on a crutch and has been modified to achieve fewer crowds. Entertainment is almost nonexistent in the way we knew it back in 2019. It’s just become increasingly difficult to fathom a Queen Mary Island before taking into consideration COVID compliance, which then begins to increase the price well above the predicted $250 million.
“The Queen Mary has long been a challenge to operate, with a 2017 study recommending that as much as $289 million worth of renovations and upgrades were needed to keep parts of the ship from flooding. The ship has 314 rooms and three restaurants, some of which have undergone renovations in the last few years.”
Even Walt Disney Co. opted out of a lease it had with the Queen Mary; A Sea-themed amusement park fell through in 1990, and instead Disney built California Adventure. But they were among several firms that tried and failed with the ship. In short, the pandemic probably hastened this bankruptcy since years of failed investments and troublesome maintenance dealt considerable blows to its reputation for investors.
Queen Mary Island as is, would have been a solid venture in 2019, but the space may need to be reassessed as innovation will be key for retailers even after the pandemic.
“Long Beach said in its statement that it ‘is concerned’ about the Eagle Hospitality bankruptcy, ‘as the company has a long-term obligation to ensure the upkeep and operation of the city’s asset.’”