In total, more than two dozen hotels and other properties were part of the filing by the company, which has more than $500 million in debt.
Eagle Hospitality stopped trading on the Singapore Stock Exchange in 2019 after defaulting on a loan from Bank of America.
While the company operates the Queen Mary, the city of Long Beach owns the property, and Eagle Hospitality has a ground lease.
In a ground lease, different entities own the land and the improvements on the land. Ground leases on the water are not uncommon and can frequently be found in areas like Marina del Rey.
The Queen Mary has been closed to the public since May due to the pandemic.
Investment firm Urban Commons signed a lease to run the Queen Mary in 2016. In 2019, it created Eagle Hospitality Trust but ran into trouble. In the fall, the group ended its master lease agreements for Urban Commons hotels.
Urban Commons owes hundreds of thousands of dollars of unpaid occupancy taxes to the city, according to the Long Beach Post.
“There have been rumblings of problems with the city for quite a while now,” said Alan Reay, president of Atlas Hospitality Group. “That’s indicative of all of the problems Eagle Hospitality is experiencing. And this has been brewing for quite a long time, them having financial problems.”
Reay added that these struggles started pre-Covid, which has “devastated” the hotel industry.
He said that in 2020, only two hotel companies had liabilities of more than $50 million nationally and filed for bankruptcy. Having one large bankruptcy in January, he added, “speaks a lot about the downturn in the hotel market. 2020 is the worst hotel market in terms of revenue in the history of tracking numbers. Eagle Hospitality isn’t alone in terms of financial distress, but what’s unusual is they’ve filed for bankruptcy when we’ve seen so many other hotels with financial difficulties have lenders who are willing to work with them.”
The Queen Mary left England on its first voyage in 1936. The ship had multiple dining areas, pools, a ballroom, a small hospital and carried 2.2 million passengers and 810,000 military personnel during World War II before being retired.
The ship has been docked in Long Beach since 1967. It was operated by the Diners Club Credit Card Co. when it arrived in Southern California, but the company backed out before the vessel opened to the public.
Walt Disney Co. owned the ship at one point, as did Joe Prevratil, who later filed for Chapter 11 bankruptcy.
Prior to the pandemic, the Queen Mary attracted more than 1.5 million visitors yearly. According to a report from Urban Commons and Beacon Economics, in 2019 the ship generated $205.3 million of economic output and supported more than 2,000 jobs.
Reay said Eagle Hospitality could restructure by bringing in partners, or a bankruptcy court could force the trust to sell its assets. In that case, he added, the properties would likely sell for less than the value Eagle Hospitality Trust places on them.
There are lots of investors, Reay said, “sitting on the sidelines waiting to buy assets like this. I think it would get into the hands of an established hotel operator.”
Still, he said, the Queen Mary being on a ground lease could be a negative for some.
“It diminishes your buying pool and will have a negative effect on the financing someone can get on the hotel and on what buyers are willing to pay for it,” Reay said.
