You Can't Judge a Book by Its Delinquency - SASB Hospitality Default Rates Don't Tell the Whole Story

The hospitality industry continues to suffer from the effects of the Coronavirus Disease (COVID-19) pandemic and efforts to contain the virus’ spread have resulted in the cancellation of many major conferences, sporting events, festivals, and other events and have curtailed business and, to a lesser degree, leisure travel. DBRS Morningstar is monitoring the effect of these trends, particularly with regard to the immediate and longer-term impact to hotel properties backing commercial mortgage-backed securities loans in our rated book. Of all DBRS Morningstar-rated single-asset/single-borrower (SASB) hospitality loans, 21.3% are 60 or more days delinquent, compared with 15.1% for the universe of SASB hospitality loans. We believe that delinquency rates tell only part of the story, however, and that several other factors are important when looking at hotel performance through the lens of the coronavirus pandemic.