Red Roof Inn Defaults on Mortgages

Economy lodging company Red Roof Inns, Inc. has decided to restructure their finances after defaulting on $367 million in mortgage debt. The strangest thing about the situation is that of the 130 properties that the debt is connected with, none of them seem to be actual Red Roof Inns.

Perhaps these company-owned properties are sites of future ins–or maybe they’re completely private for corporate use. Seeing that they’re legally separated from the Red Roof Inn franchise, the latter is more likely.

Either way, the $3.45 billion company is now seeking ways to resstructure the debt its acquired.

Red Roof Inns issued a statement regarding this task: “While the company is profitable on an operating basis, Red Roof believes that a debt modification is the best way for the company to manage through the current downturn and position itself for future growth.”

Some reasons cited for the default include the economic crisis, a higher percentage of vacancies (a 50% rate, down 11% from last year), as well as the high cost of the chain’s new reservation system, a whopping $20 million.

That’s got to be some system. Perhaps it involves rocket science, or maybe diamonds in place of booking agents? Or maybe it’s simply a cover-up for embarrassing amounts spent over promotinos featuring Little Big Town and Whitney Duncan?

Red Roof Inns has not announced selling off any hotels or changing their brand name at this point. Their four smaller mortgages, totaling about $12.5 million, are current.