The Mercury News
08/12/19

More Than 1,000 Hotel Rooms Headed for North San Jose
By George Avalos

More than 1,000 hotel rooms headed for north San Jose

SAN JOSE — A burst of hotels that are under construction or poised to launch is expected to bring north San Jose roughly 1,100 new hotel rooms, according to sources related to the endeavors.

All told, seven hotels are under construction, have just opened or are poised to launch development, in north San Jose.

“The demand for hotel rooms will absolutely support this development activity,” said Alan Reay, president of Atlas Hospitality Group, an Irvine-based firm that tracks the California lodging market.

Two hotels opened this month, four others are being built, and land has been purchased for the seventh hotel.

Together, these hotels would bring 1,110 hotel rooms to north San Jose once they are all complete and begin operations. The six hotels that are under construction or recently opened account for 910 new rooms.

“If anything, demand will probably increase,” Reay said.

Recently released market research appears to bolster Reay’s assessment.

Over the first five months of 2019, compared with the similar five-month stretch of 2018, revenue per available room in the Santa Clara County-San Mateo County hotel market is on the rise. Revenue per available room is the most closely followed metric to determine the state of a hotel market.

Revenue per available room in Silicon Valley and the adjacent Peninsula area averaged $181.40 during the first five months of 2019, according to a report by CBRE Hotels Advisory. That was up 0.4 percent from the similar five-month period of 2018, the CBRE Hotels report fsaid.

A dual-brand lodging complex comprises the two hotels that just opened at 656 America Center Court in north San Jose. The two Marriott brands are a 147-room Residence Inn and 114-room Fairfield Inn. InfiniPower Hospitality is the owner of the property.

“Marriott and some other hotel chains are promoting this co-branding approach,” said Devang Shah, principal executive with InfiniPower Hospitality. “You will have two hotels in one building. They would share the public spaces, the front desk, the food and beverage areas and all the joint amenities.”

Now under construction are a 144-room Hampton Inn & Suites at 2108 N. First St., a 150-room Hilton Garden Inn at 111 E. Gish Road, a 165-room Hyatt House at 2103 N. First St., and a 190-room Hyatt Place at 2103 N. First St.

The two Hyatt hotels on North First Street also are a dual-brand facility with a shared lobby. They are slated to open by the end of August, according to Reay.

Shilla Stay is planning a 200-room hotel at 4701 N. First Street in the Alviso district. That hotel moved closer to reality July 29 when South Korea-based hotel operator Shilla, an affiliate of consumer electronics behemoth Samsung, paid $22.5 million for the land it needs for the facility.

“These north San Jose hotels cater more to the business customer,” Reay said. “You see more of this type of product in Silicon Valley than the resort hotel with several hundred rooms.”

Google, Apple, Rambus, Roku, Hewlett Packard Enterprise, Micron Technology, and Samsung, through property purchases, leases, or both, have taken steps in recent years — and weeks — to establish new sites or dramatically expand operations in north San Jose.

“Tech companies in the area are the real demand generators.” Reay said.