Recently, the city of Ocean Shores ordered the closure of the Shilo Inns Ocean Shores near the Chance a la Mer beach approach for numerous reasons and suspended all business licenses issued to Shilo Inns.

The order states, “Business operations may not resume until all violations have been corrected, verified by inspection and written authorization to operate has been issued by the city.”

According to the city’s Local Improvement District assessment statement, as of Jan. 31 Shilo Inns owes $96,996 including principal, interest, and penalties/costs. In August of 2025, Shilo Inns submitted payments totalling roughly $40,000 for outstanding utility bills. As of Jan. 28, Shilo Inns owes the city of Ocean Shores $25,448. A water disconnect notice was sent on Jan. 16 with a due date of Jan. 23. Water service was subsequently shut off. According to the Grays Harbor County Assessor’s website, Shilo Inns owes $233,898 in property taxes. Current market value for the property is $12.9 million.

After a routine inspection conducted by Code Enforcement Officer Christine Tamez-McClain, the city issued a “Notice and Order to Abate Unsafe or Unlawful Condition,” on Jan. 28 and a notice that the building “must not be occupied until inspected and approved for occupancy.”

“We started off on the south side of town, and I made my way over. And the water shut off at the Shilo just kind of ended up at the same time, me doing the inspection,” Tamez-McClain said. “When I do my inspections, I also look to make sure that the transient accommodation license is good. Theirs is suspended. The manager was not aware that it was suspended. I let them know it’s suspended, they need to get it back in good standing to be operating correctly. So, they got working on it right away while I was there. Their business license on the wall was expired. They did have a good one, they just hadn’t put it on the wall. Their fire alarm system did not have the correct stickers on the wall. Those are all things that I’m looking for, making sure that all of this stuff is in compliance in all hotels. We’re just making sure that things are safe for our guests that come to Ocean Shores.”

On Jan. 27 the Ocean Shores Fire Department’s Fire Inspector Andrew Mills informed Shilo Inns that the fire department had been made aware of work being done without a permit and that a “stop work” order was issued and posted. Mills indicated that he found that a new fire panel was being installed without a permit.

A 13-page Ocean Shores Transient Inspection report prepared by Tamez-McClain dated Jan. 27 indicated that the Shilo Inns Ocean Shores’ Transient Accommodations license is suspended, employees were not adequately supervised to ensure that the facility is clean, safe, sanitary and in good repair and that the facility is dirty throughout, outdoor sidewalks were unsafe due to debris, unsafe drinking water was not labeled, fire alarm records were not up to date, not every room has an operable smoke detector, there was no documentation for the use of extension cords and space heaters, trash and cleanliness are an issue, and many fixtures are in various states of disrepair.

Tamez-McClain’s letter of additional findings included bed bug infestations in several rooms and more cleanliness problems and intimated that the hotel is allowing long-term occupancy exceeding 30 days.

According to Ocean Shores Mayor Frank Elduen, workers at the Shilo Inns Ocean Shores have not been paid in some time.

“A big part was, in fact, that they’re not clean enough anymore because they can’t pay their employees. They’ve gone at least a month without pay,” an individual, speaking on the condition of anonymity, confirmed that Shilo Inns Ocean Shores employees are sitting on two to three uncashable paychecks.

In July 2025, a Transient Accommodations Inspection Report prepared by the Washington State Department of Health indicated overflowing garbage, flies in the fitness room bathroom and spiders in guest laundry, lack of current boiler certificates, lack of adequate hot and cold water available to guests at all times, stained carpeting and mattresses and peeling wallpaper in certain rooms. This led to a shut-down of the hotel at that time. After making good on outstanding utility payments and fixing a propane leak, the hotel re-opened in mid-August, before being shut down again on Jan. 28.

In order to reopen, the Shilo Inns must:

Restore water service to the entire property

Obtain all necessary permits and pass all inspections required by the city of Ocean Shores

Schedule a joint inspection of the entire building with both the Fire Inspector, Building Inspector, and Washington State Health Department

All required city, county and state licenses need to be up to date

Remediate bed bug infestation cited in Jan. 27, 2026 Transient Accommodation Inspection conducted by city Code Enforcement

According to city officials, with 113 “luxury suites,” issues with rooms at the Shilo puts Ocean Shores’ ability to attract tourists and conventioneers at risk. The Shilo Inns Ocean Shores hotel employs an average of 15 people and 15 to 20 in the restaurant.

Ocean Shores’ Shilo Inn isn’t the only location in the 10-property franchise that closed at the end of January. Bend, Oregon’s KTVZ reported, “Bend’s Shilo Inn is now one of three Oregon hotels owned by the chain to close amid bankruptcy, the latest sign of deepening financial woes for the long-running regional brand.

“Currently, three Shilo Inns locations in Oregon are confirmed to be bankrupt: Bend, Warrenton and Newport. Federal court documents indicate that a Chapter Seven bankruptcy hearing for the Bend and Warrenton locations is set for next week. Under Chapter Seven, the company is unable to resolve its financial difficulties, which could lead to the liquidation of assets to repay creditors.”

Lincoln Chronicle reported in July 2025 that “The Shilo Inns Newport Oceanfront Hotel, which earned a reputation for not paying its taxes and is now operating with part of the facility closed due to fire code violations, has been put up for a court-ordered sale in the wake of the parent company’s financial collapse.” In 2023, Willamette Week reported that Shilo Inns Founder Mark Hemstreet owed more than $20 million in back taxes. In 2019, Hemstreet was sued by the city of Salem, Oregon for refusing to pay more than $143,000 in unpaid room taxes, penalties and interest dating back to the summer of 2018, according to the Statesman Journal.