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.

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For those who still haven’t made travel plans, there may be some surprising resort bargains to consider–while other large and super-luxurious resorts are stalled under construction and financing difficulties.

Crisis in Paradise via Breitbart shares some disturbing news:

• Cap Cana, a luxury resort under development in the Dominican Republic is now reportedly paralyzed. A mega resort with four luxury hotels, villas (with roof tiles on the ground), three golf courses and a large yacht marina, Cap Cana is just one of many luxury resort projects “affected by the economic tsunami that has paralyzed the global financial markets,” said Cap Cana President Ricardo Hazoury.

• Also stalled in the Ritz Carlton Molasses Reef Resort in West Caicos. This luxurious project with hotel, condos and marina is three-quarters complete.

• The massive Atlantis Resort in the Bahamas has laid off 800 workers, blaming low occupancy rates.

• The Wyndham Nassau Resort has laid off 40 employees–presumably for the same reasons.

• Puerto Rico’s Caribe Hilton is also laying off employees because of rising cost and those pesky occupancy issues.

If reasonable air fares can be snagged, this could be the year for luxury travel bargains!

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