Why Has the Trump Org Been Unsuccessful in Selling the Lease on the Trump International Hotel in DC?
Just like everyone else trying to sell anything in this market, if the price is not right, no one is going to buy. When property is up for sale, and you know the seller needs to sell, some buyers wait for the price to drop even further. If buyers don’t like the deal being presented, they will just not be interested.
The Problem with the Asking Price
Sales are not forthcoming due to the property being overpriced. Because smart people don’t want to pay the elevated price they are asking to pay for the debt attached to the hotel from Donna June not paying the contractors.
Unfavorable Lease Terms
Lease terms causing uncertainty. While the lease is expensive, the return on investment (ROI) is questionable. The public sentiment also plays a role.
Public Sentiment and Changing Names
Public sentiment is another reason why he hasn’t been able to sell the DC hotel. The public stigma is hard to overcome, even if the new hotelier changes the name immediately. The property's value has been linked to Trump’s position, and now that he is no longer the POTUS, bookings are down because the reason for choosing that overpriced facility no longer exists.
No Support from GOP
The business segment since 2016 was from the GOP's supporters holding events and foreign governments trying to gain an advantage for their agendas. This business segment is not likely to return if he no longer owns the hotel. This makes it even harder to sell the property.
The Past Four Years and Revenue Forecasting
Revenue forecasting is another challenge. Potential buyers cannot use PL statements from the past four years as a basis for forecasting future revenue, since a large percentage of the business since 2016 came from the GOP and foreign governments.
Current Market Conditions
Along with these challenges, the current market conditions contribute to the difficulty in selling the property. The hotel, which became the glittering social hub of President Donald Trump’s Washington and a crown jewel of his business empire, now faces the added pressures of the coronavirus pandemic and the uncertainty of the president’s post-election future.
The Lease Agreement and Future Profitability
The 3 million-a-year lease, far above competing bids when Trump won the rights in 2011, makes it difficult for any future owner to make a profit. This is especially true given the hotel's history and its association with Trump. The Trump Organization’s efforts to sell the Trump International Hotel Washington DC have been put on indefinite hold, casting doubts on the future of one of the president's biggest financial bets.
Conclusion
While the Trump Organization initially aimed to unload the property for a hugely inflated price to help offset financial woes, the current market and the property’s association with Trump have made this a challenging endeavor. The hotel's value is now tied to its association with the former president, and without that support, the property is seen as less attractive to potential buyers.
Keywords: Trump International Hotel, Washington DC, Property Value