It's happened again, another luxury hotel is in default. Millennium Partners has said that it has defaulted on a two-year-old, $90-million CMBS loan for the Four Seasons San Francisco. Like other hotel owners, Millennium made this move as a bargaining tool with an eye toward renegotiating the debt with the special servicer, LNR Property Corp., because the value of the hotel is lower than the debt. Alan Reay, president of Irvine, CA-based Atlas Hospitality Group told GlobeSt.com. "My prediction is you are going to see vast majority of CMBS loans in California--probably throughout country--defaulting."

We've already seen another California hotel, the W Hotel in San Diego in a similar situation. Loans made over the past two years were made at the peak of the market. Now with real estate prices and hotel occupancy rates in sharp decline, borrowers want relief. The Four Seasons San Francisco remains open and is offering a package that offers a free third night if you stay two consecutive nights.

Last time we checked out the Watergate hotel back in 2007 the hotel was holding a liquidation sale in advance of a major renovation. Now the Washington Post reports that the infamous Washington D.C. hotel could be the latest hotel to head for foreclosure. Washington developer Monument Realty defaulted on a $70 million loan that came due this week. Monument bought the hotel five years ago and it has been closed ever since. Initially the developer planned to cash in on the real estate craze by turning it into luxury co-op apartments. Last year it decided to keep it as a hotel. Lehman Brothers was also a partner and equity investor in the property.

Michael J. Darby, a company principal and co-founder of Monument told the Washington Post that the company is still committed to the project and thinks the Watergate can be a "great hotel in the future." Monument is working with the lender, New York-based PB Capital, to restructure the loan. The Washington Business Journal reports that PB Capital has its own problems. Back in December PB Capital moved to foreclose on the Dumont Condominium.

The last few months have seen a rash of hotel projects facing foreclosure all around the country. The Watergate is at a distinct disadvantage because it is not open like many of the other hotels so there is no revenue coming in. What it does have is name recognition courtesy of Richard Nixon but it's not clear if that name can become associated with something more than scandal.

UPDATE: The AP is reporting that the hotel may be auctioned off on July 21. Alex Cooper Auctioneers lists a property with the Watergate's address set to be sold on that date. A $1 million deposit is required.