Hotel Hell - Luxury Hotels Foreclosed

Luxury hotels are defaulting on their loans as the economy kills off business travel. But what is ailing the hotel industry is good for consumers as room rates fall.

CNNMoney tells the story of 8 foreclosed luxury hotels in Foreclosure Inn.

Here are a few of my favorites. Please click on the link to see them all.

W Hotel San Diego

Location: Downtown San Diego
Stars: 3
Labor Day Weekend rate $153

An early California satellite of the New York City-based chain that caters to affluent hipsters, the "W" quickly became a chic gathering spot. It's just a few blocks from the harbor and near the Gaslight Quarter and it numerous clubs, bars and restaurants.

Default: The owner, Sunstone Hotel Investors, announced in June that it would default on a payment on its $65 million loan and would let the property be repossessed by its lender. Declines in both business and holiday travel cut into room rates and pushed down occupancy and the property is now worth less than its debt, according to Sunstone's CFO. It continues to take in guests and operate normally.

St. Regis Monarch Beach Resort

Location: Orange County, Calif.
Stars: 5
Labor Day Weekend rate: $478

If you want to feel like an upper management type on a corporate junket after the company has accepted a multimillion-dollar government bailout, try this ultra-luxury resort. After all, it's where AIG spent $440,000 on a corporate retreat a week after the Federal Reserve gave the company an emergency $85 billion loan.

Default: The owners defaulted on their $70 million loan to CitiGroup and voluntarily transferred their interests to the bank this week, according to a spokeswoman for Starwood Hotels & Resorts, which runs the hotel. The spokeswoman said the default has not affected operations and it continues to be business as usual there.

The Ritz-Carlton Kapalua

Location: Maui, Hawaii
Stars: 4
Labor Day Weekend rate: $299

This slice of the American Paradise forms part of a 23,000-acre pineapple plantation. There's plenty to do here with two golf courses, a triple-tiered swimming pool and ocean beaches. There's also great pampering in the 14,000-square-foot spa with 15 private rooms.

The hotel went through a recent renovation that left rooms with new marble baths, native Hawaiian paintings and other decorations and spacious lanais. There's also a new fitness center with yoga and Pacific views.

Default: The majority owners, an investment group headed up by Goldman Sachs and Gencom, defaulted on a $260 million loan in April, but the Ritz-Carlton, a division of Marriot, continues to run the inn.

The Wigwam Resort

Location: Litchfield Park, Ariz.
Stars: 3
Labor Day Weekend rate: $79

The Wigwam opened in 1929, and the grounds remain lovely, with meandering pathways and desert-scapes of saguaro and other cacti, palm trees and cottonwoods. The sunny Arizona weather enables guests to enjoy great golfing with 54 championship holes. There are also nine tennis courts, and two pools with water slides.

The resort lies in a northwestern suburb of Phoenix well away from the hustle of the city. But a glut of hotel rooms in the Phoenix area and a drop in pricing have hurt the Wigwam's profits.

Default: The resort was set to be auctioned off in early July, but the action was postponed after the owners filed for bankruptcy. The case is now before a court and the parties may try to negotiate a settlement on the $65 million debt.