NEW YORK— Hurricane Katrina’s financial impact on REITs is expected to be minor, according to a Moody’s Investors Service report. However, any measurable impact will most likely be felt specifically by lodging REITs that own properties in the affected region. From an overall point of view, Moody’s indicated that the impact on lodging REITs will not be significant, even though New Orleans and coastal Alabama and Mississippi are important entertainment and tourist destinations. Currently, many hotel REITs have indicated that the extent of damage to their properties is not yet known since the region is not yet accessible. FelCor Lodging Trust owns three hotels in New Orleans, MeriStar Hospitality has two and Hospitality Properties Trust and Host Marriott each have one in the city. These hotels are likely to have experienced damage, according to Moody’s. Meanwhile, La Quinta has announced that its eight hotels in the greater New Orleans area, which Moody’s estimated to be about 3% of La Quinta’s branded, owned room count, are closed until further notice. However, the company’s hotels outside of New Orleans remain open. All of these companies are confident that property and business interruption insurance will cover any losses related to Hurricane Katrina. Any concern centers on the impact of a prolonged recovery in the affected areas. However, hotels in neighboring areas are likely to experience near-term increases in occupancy as relief workers enter the area, the report stated.
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