by Roberta Murphy

We are seeing luxury scaled down on many fronts, and luxury hotels and timeshare resorts are taking it on the chin as well.

For the first five months of this year, according the the Wall Street Journal, U.S. hotel occupancy has declined 53 percent. This is the lowest drop in occupancy since 1987, when Smith Travel Research began tracking these numbers.

While both luxury and budget hotels are ailing with declining revenues, those hotel investors suffering the most (just like homeowners) are the ones who bought their real estate at the top of the market with loads of debt. Defaults on these hotel loans have spiked, and securitized mortgages (where loans are chopped up and sold to different investors as bonds) are also expected to rise from 4.7 percent to over 8 percent by year’s end, according to Morgan Stanley.

Timeshares are faring not much better. The biggest timeshare operator in this country, Wyndham Worldwide Corp has seen timeshare sales plunge 39 percent from a year ago. Another big loser is Marriott International, whose timeshare business reported a $17 million loss in the first quarter of this year.

And then we have luxury hotel operators like Four Seasons, which manages a number of luxury hotels, and is facing pressure from hotel owners to discount room rates in response to economic pressures. Recently, the owners of the Aviara Four Seasons Resort in Carlsbad, CA (north of San Diego) tried to divorce themselves from Four Seasons, who have a 30-year management contract with Broadreach Capital Partners of Palo Alto, CA. The owners are trying to preserve financial viability, while Four Seasons is trying to protect its non-discounting luxury reputation–and its contract.

Four Seasons, incidentally, was the only luxury hotel not to discount room rates after the 9/11 terrorist attacks. This was broadly seen as a brilliant move. Four Seasons, with its 82 hotels around the world, maintained both its profitability and its luxurious reputation.

These harsh economic times, though, are weighing heavily on the luxury hotel market. Their fixed costs are higher with staffing, valet service and maintenance–while corporate travel has shrunk and leisure travelers are bargain hunting. This has caused many hotel operators to discount room rates and offer bargain travel packages.

This is a market that surely has not only the venerable Four Seasons on guarded watch, but also the Ritz Carlton, the St. Regis and other five-star destinations throughout the world.

by Roberta Murphy

(It is with sadness that we learned of Michael Jackson’s death due to a heart attack this afternoon, apparently at his Holmby Hills mansion.  In the days ahead, many will be wondering about the fate of Neverland. Our prayers and kind wishes are extended to the Jackson family.)

Over two years ago, we were speculating about the fate of Michael Jackson’s Neverland and wondered if it would become a Ghost Land instead. The animals were gone, helicopter landing pads were still–and recently, according to the Wall Street Journal, bats took to hanging from the doorway over Jackson’s once-famous gaming arcade, leaving piles of guano below.

Thought Neverland could never come back to life? Well, never say never.

A year or so ago, Michael Jackson defaulted on his $24.5 million mortgage which was bought for $23 million by a Los Angeles investment group. They, in turn, formed a private partnership with Jackson with the intent of bringing Neverland to a fruitful investment. There is speculation that the Santa Barbara County property could eventually and realistically be worth $70 to $90 million.

In the meantime and to date, Colony Capital LLC has spent over $3 million and hired 80 workers to rehabilitate Neverland. Electrical and plumbing systems are being brought up to date, and landscaping is being redone. The Neverland gates, amusement rides and zoo may be gone, but evidence of Neverland’s former glory remain–including two railway lines , a 50-seat theater and the English Tudor-styled buildings.

Michael Jackson paid $19.5 million for Neverland in 1987 and poured hundreds of million into it over the next 18 years. In 2005, after Jackson was cleared of child molestation charges, he swore he would never return to Neverland. The estate was abandoned in July of that year and was reported to have been subsequently marketed to David Beckham and his wife, Victoria (Posh Spice). The price tag expected in those heady real estate days?

$50 million.

Neverland may have been decimated not so much by Michael Jackson’s legal troubles, or even its eventual neglect, but by market conditions that have decimated property and home values all over the country. And perhaps Neverland’s sale at $23 million simply reflects a market bottom–of sorts.

In the blogging world, an absence of six weeks is almost unforgivable.

But had I draped a black cloth over it on April 24, 2009 you might have understood. That’s the day my Dad and best friend died in Encinitas, CAafter a lengthy illness. It’s really tough to become an orphan when the last parent exits–especially if the relationship has been a close one. I shared this loss equally with my sister Gayle, in Houston who also misses the sage advice and counsel of our patriarch.

Our mother, Edith Michelson, died in 2006. Her husband of 59 years and a heroic pilot of three wars, Retired Lt. Col Robert Michelson, would spend the next three years of his life gently encouraging the dreams of his two daughters and five grandsons. On a personal level, Bob Michelson in his 80’s also abandoned a lifetime of agnostic views, and to our absolute amazement, developed a wondrous faith in God the last two weeks of his life.

He was also enormously curious about new technologies. Dad was the first person I knew to download Window’s Vista–and wished for stem cell technologies that might one day cure his own illness as well as those of others. He loved our country, watched Wall Street closely, was an Astros and Padres fan, and hated Nancy Pelosi. Dad’s idea of a perfect meal would be a bowl of spicy bean soup and a crusty piece of bread. He was modest, generous to a fault, and promised to be a guardian angel for us all.

We miss him terribly.

And that is probably why my writing gears have been frozen this past month or so. And though our real estate business continued and even flourished, I just couldn’t bring myself to write about San Diego real estate, market conditions or luxury homes–and remain indebted to my husband and partner Mike as well as associates in our company who so kindly aided me and our clients during this personal and unprecedented period of grieving.

I spoke with a Philadelphia food writer a week or so ago and she could not understand how I could abandon writing during this grieving period–because writing would be her salvation. I didn’t write because I feared alienating you with my sadness and the process of putting a deceased parent’s affairs into final order. At the same time, I didn’t feel able to write about the things I usually favor because of this big life transition. A simple diagnosis might be writer’s block. And that is something that just has to work itself out.

Those writing gears, though, have begun to thaw and life’s rhythms are returning to normal. Laughter is easier, tears have subsided and reconnecting with friends–and you– is now a priority. It feels good to be home. –Roberta Michelson Murphy