The landmark Fairmont Hotel, located in the heart of the cultural and entertainment district of downtown San Jose, is temporarily closing, it was announced on Friday.
FMT SJ LLC, the flagship hotel operator, filed a Chapter 11 reorganization on Friday, temporarily closing the hotel for up to three months, while finding a management partner and expanding its existing mortgage debt.
The hotel abruptly ceased operations on Friday, relocating its few remaining guests to nearby hotel rooms at the expense of the property.
“We know that by taking this difficult step, we will return to a more vibrant hotel for the benefit of all of San Jose, including the vitality of the city’s city, nearby businesses and Silicon Valley conventions in a post-COVID-19 world.” said Sam Singer, the hotel’s representative.
Singer said he expects the hotel to prepare for operations again in about 60-90 days.
In addition, Singer said the hotel suffered from the impact of COVID-19. As a result of the pandemic, all conventions for 2020 and 2021 have been canceled, and employment throughout the pandemic has been less than 7%. The hotel lost at least $ 18 million in 2020 and is expected to lose at least another $ 20 million in 2021, according to the hotel owner.
Singer said he was optimistic that the hotel’s secured creditor would work cooperatively to ensure the hotel returns stronger after the reorganization and as the region and nation emerge from the pandemic.
When the hotel reopens in mid-2021, the property expects to have a new manager and a new brand; one with the ability and desire to infuse tens of millions of dollars of capital into the hotel and its operations and a robust pipeline of future hotel convention business.
The impact of the pandemic was significant, Singer said.
“The owner is engaged in a process that will ensure the long-term viability of the hotel and run the business both at the hotel and at the major center and convention center in San Jose,” he added.
The hotel has 805 rooms, a landmark at 170 South Market St. a fitness center and a rooftop pool and gazebo. The hotel offers large ballrooms for large conferences and conventions, as well as intimate spaces for smaller gatherings.