The seizure of the St Regis Monarch Beach, where American International Group sponsored a luxury retreat just days after accepting a federal bailout, is the most dramatic sign yet of the deep troubles in the market for high-end hotels.

Citigroup took over the Dana Point hotel and golf course Monday after months of negotiations over a $70m loan that was in default. A foreclosure auction slated for today was cancelled after the lender realised there would be no serious bids for the property, according to a knowledgeable person who was not authorised to discuss the situation publicly and spoke on condition of anonymity.

Los Angeles Times