THE LEGENDARY QUEEN MARY HOTEL’S OPERATOR FILES FOR BANKRUPTCY

The Eagle Hospitality Trust, the operator of the Queen Mary liner, which has been a California hotel and a Long Beach landmark since 1967, filed for bankruptcy protection in the court of US this week. The statement says that Eagle Hospitality liabilities exceeded $ 500 million. It is known that in addition to Queen Mary, the fund operates 26 more hotels. Many experts assess the taken step as a possible start of a wave of bankruptcies in the hospitality industry in the United States.

According to American experts, only two companies operating the hotel business have recently filed for bankruptcy. Despite the fact that the hotel market in the United States was devastated by the pandemic, its participants did not file for bankruptcy.

As noted by the founder of Atlas Hospitality Group Alan Rae, many have received consent from lenders to postpone loan payments and wait for recovery.

The Queen Mary bankruptcy could be the starting point for a string of similar bankruptcies if creditors decide to abandon the deferral of payments, fearing that the temporary delay would further undermine the condition of the debtor firms.

The Eagle Hospitality Trust, a real estate investment fund, was established by the Urban Commons Investment and Development Company in 2019. The company previously issued a 66-year lease for the Long Beach Municipality Queen Mary ship, as well as 65 acres of various developments around the vessel. The lease is valid until 2082, and the trust company was specifically listed on the Singapore Stock Exchange to raise funds to finance commercial construction next to the former ocean liner.

The legendary ship with more than 85 years of history was first launched in September 1934.

The liner successfully completed military service during the Second World War, and then continued to run regularly as a carrier across the Atlantic Ocean. However, the development of the air transportation market did not allow it to withstand the competition, making the ship unprofitable. The low draft prevented the ship from appearing in the island ports, and the width of the ship exceeded the width of the Panama Canal by one meter, forcing it to make a huge detour.

Since the late 1960s, the vessel has become a tourist attraction in Long Beach, but its operation continued to be a daunting task. To prevent the flooding of parts of the ship, as shown by the expert check conducted in 2017, repairs were required, the cost of which was $ 289 million.

314 rooms and three restaurants have been modernized. Urban Commons then unveiled a project according to which it was planned to raise $ 250 million by organizing the construction of an entertainment complex on the waterfront next to the ship.

The funds raised from its use could have been spent on the repair of the liner.

According to economic forensics data released a year ago, Queen Mary had annual revenue of $ 205.3 million, $ 93.7 million of which were spent by customers directly in Long Beach. The liner provided 2,224 jobs for residents of Los Angeles County, 1,374 employees were residents of Long Beach itself.

Experts note that over the past half century, the city has attracted various companies to manage the vessel and develop the adjacent territories on the ocean coast. However, the results of their work not always were unambiguous. In particular, in 1990, Walt Disney film company became the operator of the liner, planning to turn the ship into an amusement park worth $ 3 billion.

However, after several years of commercial operation of the vessel, the company refused to renew the lease.

In 2009, immediately after the economic recession, the ship's occupancy rate fell by half, which was barely enough to make ends meet. As a result, desperate to get a higher profitability, the management of the operator completed the reconstruction of one of the cabins, in which strange sounds and unexplained accidents arose at night. The cabin got into several TV shows (for example, "Ghostbusters"), and the company was able to rent the "mystical" cabin for the night for $ 499.

The Eagle Hospitality Trust's current bankruptcy petition has seriously worried the City of Long Beach. In the near future, it is planned to organize meetings of the company's management with the city council to determine the future fate of the liner.