All these real estate based companies roll their equity into new real estate investments, so they can’t afford any drop in their valuation or all their loans will be underwater. That means they can’t reduce the price of their office rentals or in this case, hotel rooms, because their valuation is based on a multiple of their rent. Better to leave it vacant at the original asking rent.
It’s a fucked up trade-off for governments (who can pull the incentive levers to modify this behavior) because on one hand by allowing this to continue by giving tax write offs to vacant commercial property owners, they prevent collapse. But on the other hand, they are also sabotaging the economy because people who are starting a new business can’t get cheap office space, they’re reducing tourism by propping up hotel rates, etc.
I think in the end it comes down to the fact that there would be a big news cycle about how their city is in trouble if commercial properties start getting repossessed, and the other problems caused by artificially high commercial RE prices are a quiet burn that dont cause any specific events to garner media attention.