SAN JOSE, Calif. (KRON) – The Fairmont San Jose filed for Chapter 11 reorganization bankruptcy on Friday.
The hotel closed as they seek a management partner and ‘extend the existing mortgage debt.’
The few guests remaining in the hotel were relocated to other hotels.
“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.
Singer expects that operations will resume in about 60 to 90 days.
The Fairmont, just like others in the hospitality business, suffered as conventions were canceled and occupancy drastically dropped due to the pandemic.
In 2020, the owner says the hotel lost at least $18 million and projects a loss of another $20 million in 2021.
A statement released said that the owner 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.’
“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,” Singer said.
The Chapter 11 reorganization will focus on three objectives:
- Rejecting the existing hotel management agreement so that the owner can transition to a new hotel brand
- Running a comprehensive process to solicit proposals from appropriate hotel brands who are willing to provide substantial exit financing for the hotel
- Extending the maturity date on its mortgage loan