(AROUND THE WEB) — “We’re the ones that are paying the price for his ridiculous ego,” said Howard Finkelstein, an investor in Trump International Hotel & Tower in New York.
The investors in Trump hotels in New York and Chicago have been taking a hit due to Trump’s political rise. Through the condo-hotel arrangement, these small-time investors share in the booking profits for the rooms and due to 14 percent decline in revenue, after adjusting for inflation at the New York flagship hotel, the revenue is not covering the fees and taxes that would pay for the room. Investors in Chicago have been feeling the pressure too, as bookings has dropped 8 percent from 2015 to 2016.
“I don’t even like walking past the building…I can’t even look at it,” said Dave Roberts, a retired electrician who invested $650,000 in a single room at the Trump Hotel in Chicago. Ten years ago Roberts believed “everything he (Trump) touches turns to gold.”
Since President Trump has been sworn in, revenue for Trump hotels has dropped. Fewer guests have checked in and the real estate market is saturated with unsold Trump hotel rooms, as its estimated that property value has decreased by half. Unfortunately for Roberts, Trump’s golden touch has worn off.
These investors who have provided internal documents from the Trump Organization have shown that these financial drops occurred as Trump’s political career took off. The board of the New York flagship hotel considered the idea of removing the Trump brand name, which caused tensions to rise. The board voted to remove the name but was not brought to fruition.
The hotel-condo arrangements allows investors to buy individual hotel rooms, while Trump unloads the financial risks to investors. Trump, who owes his empire to these cities, is now loathed by their communities. “There’s a lot of people who have nothing to do with him that are being injured,” said Finkelstein.
Luckily for Trump, he can call his father to clean up his mess. Fred Trump has repeatedly financed his son’s business with cash infusions. Trump got to keep the cash from the sold units and the contract to operate the units. Win-win.
While the New York and Chicago hotels suffer, the Washington D.C. hotel is prospering thanks to conservative groups, foreign embassy parties, and GOP fundraisers.
At both the New York and Chicago hotels, investors did have some good news. In the past year there have been new customers from overseas: an influx of visitors from Saudi Arabia, including the Crown Prince.
Still, even with the influx of foreign guests, owners of hotel rooms in New York and Chicago continue to struggle. Roberts, who had credited himself as someone who is careful with his money, currently “owes more than I can sell for.”
“The market is still significantly below where it was when the building opened, it’s not a pretty picture for somebody who purchased then,” saif Gail Lissner of Integration Realty Resource.
Although revenue in 2018 has been on the rise, owners of the New York and Chicago hotel rooms have struggled to sell them. Currently, there are 17 units for sale and they have been on the market for months.
After a New York Times Report, revealing the Trump family’s finances, The New York State Department of Taxation and Finance has launched an investigation for possible tax evasion on their properties for decades.