If it seems that the rate of foreclosure against small inns and bed and breakfast owners is higher than the rate of foreclosure against larger corporate-owned hotels, there's a reason for that.
Lenders readily admit that they are much more likely to foreclose on the mom and pop owned small inn than the larger (and much more leveraged) properties.
The question then becomes why.
In many cases, it's hard to argue against the widely held belief among lenders that small inn owners are not as financially sophisticated as corporate operators.
And, heck, even in cases where the owner would be considered rather sophisticated financially, the cloud of stubbornness that often comes along with the isolation of small inn ownership kicks in.
Oh the shockers I've seen. Don't get me started.
So when I hear industry folks vocalize their assumption that small inn owners lack financial sophistication, as much as that assumption makes my skin crawl, I also know firsthand that there's more than just a ring of truth to it. Even when they do know better or at least should know better, egos all too often get in the way.
And if I had a nickle for every B&B owner I've heard say that hotel accounting rules simply don't apply to them, I'd be a rich woman.
But is that the real reason that lenders will work with the big guys and not with the small inns? No, although it's no doubt a contributing factor.
The real reason is that they just don't know what else to do. Some hotels, it seems, are too big to fail. So instead they're propped up, fluffed up, and allowed to continue operating at a loss.
Lenders have realized the hard way that it's just not so easy to operate a hotel and keep things flowing as they might have thought a few years ago. They don't foreclose because they don't know what to do with the property if they do.
So they work with the big guys and foreclose on the small inn owners who have every egg in that basket, who will literally become homeless with the lender's action.
If that sounds unfair to you, you'll get no argument from me.
And yet, as we enter 2012 with record numbers of hotel debt coming due, we'll see more of the same.
Yes, foreclosures will increase, even at the fat cat level.
But nothing like the level of foreclosures we'll see further down the totem pole. Small inn owners, sadly, often have nothing going for them but heart. Sure there's sweat equity, community good will, and all that.
But sadly, I don't think those things are going to matter when the bills come due. Not to the bean counters anyway.
