Without any doubt, Donald Trump and his family’s luxury hotel business is going to be one of the worst hit industries as a result of the Coronavirus crisis. Anything to do with travel and excess is going to be hit hard as people cut back and try to recover financially.
Trump’s hotels are empty now and they are not going to be filling back up any time soon, which helps to explain why the Trump Organization’s April 1st rent payment to one of their properties in Florida has still not been paid. The Trump International Golf Club West Palm Beach in Florida had a rent payment due April 1st in the amount of $54,534.25 to the local government it leases the land from.
But a county representative confirmed to WaPo that the Trump Organization has not paid its rent as of Friday. The Trump Org did respond to a request for information and crafted a word salad statement trying to downplay not paying rent, but it is clear when you read between the lines that they are in serious trouble financially.
Their first excuse was that in their lease terms, they have until April 10th to pay the rent without being penalized. So Trump is late on his rent but has not yet triggered any penalties. But if he couldn’t pay rent now, why would he be able to pay on the 10th?
They can’t pay for the simple reason that they have no money. Things are getting desperate over at Trump’s Chicago Hotel for example, where they are all but cutting off the heat and turning off the lights, ““In an effort to conserve energy, most common areas . . . are illuminated and heated at a minimum level.”
Trump Org executive Alan Garten said of missing rent, “Because payment has not become due, and in light of Governor’s DeSantis’ executive order shutting down businesses throughout the State of Florida as a result of the COVID 19 pandemic, the County advised us to refrain from making payment until they have finalized their policy for the handling of their numerous leases. As soon as the County finalizes its guidance, we will, of course, fully and timely comply with its directives as well as continue to comply with the requirements of the lease.”
Lies, lies, LIES! Like usual! WaPo also acquired a statement from Ray Walter, deputy director for real estate and concessions with the Palm Beach County, who told the Trump Org in an email that, “we are unable to forgive rental” and that maybe they could look into a deferment. But as of now, there are no facts to support any Trump Org counter to the real fact that they are late on rent.
At this point a Donald Trump bankruptcy seems about guaranteed. Trump had to close his hotel in Canada Thursday, bringing his total closed properties to 17 out of the 24 he operates. Trump normally brought in $650,000 in revenue from the properties that are now closed and the ones that are open are making less.
Keep in mind for example, that the $650,000 is just revenue, not profits. We know Trump is loaded with debt and highly levered up. So out of that $650,000 is definitely a huge lease payment, insurance, utilities, payroll, the list goes on. If Trump did not have so much debt, he could use some “rainy” day funds. But he probably doesn’t have any.
Revenue is not coming in for Trump, but his lease payments are still due. If he cannot negotiate new lease and debt terms, he will go bankrupt along with the rest of his family. It’s just simple math. When things open back up, there will not be some magical tidal wave of people going back to Trump’s hotels. People are going to be cautious for some time. Only the largest luxury hotel brands that are not loaded with debt will be able to survive, a definition that does not fit the Trump Organization. Oh yeah, and House Speaker Nancy Pelosi made sure he can’t get a bailout so he’s in even more trouble than any other hotels!