Alex Barreira, Staff Reporter Aug 9, 2024, 12:46pm PDT

California hotel sales so far this year have plummeted by nearly half since last year, with the state’s most significant drop in Alameda County.

For the first half of 2024 year-over-year sales volume — measured by the dollar volume of transactions, rather than number of individual deals — has fallen 93%in Alameda County and 65% in Santa Clara County, according to research from Irvine-based firm Atlas Hospitality. The Irvine-based firm said high interest rates and a disconnect between buyer and seller price expectations have
continued to create downward pressure on deals.

Statewide, the total dollar sales volume of hotel deals is the lowest since 2000, when Atlas began its biannual California survey. The three previous lowest years followed the financial crisis in 2009 and 2010, and the 2020 pandemic year.

In the first half of this year, Alameda County saw just one hotel deal compared with two in the first half of 2023, and it tallied the state’s steepest sales volume drop at 93%. To be fair, deals this year have a tough act to follow after last year’s $163 million sale of the Claremont Club & Spa in Berkeley tipped the scales. The only deal this year has been the 148-room La Quinta Inn in Oakland, which sold for $12 million.

In San Francisco, four hotels changed hands — the same as at this point in 2023 — but dollar volume fell 51% and the median price per room declined 50%.

San Francisco’s most expensive sale this year was the 136-room Da Vinci Hotel, which Academy of Art University had been using as student housing and sold to local hotelier Natverbhai Patel for $16.5 million. The art school was also reportedly under contract earlier this year to sell its 114-unit Commodore dorm building on Sutter Street to a buyer interested in a tourist hotel conversion.

Meanwhile in Santa Clara County, the median key price increased by more than 11% for the one hotel deal this year, compared with the two in the first half 2023. The lone deal in 2024 was for the 51-room Comfort Suites San Jose Airport, which sold for about $10.3 million.

While the number of individual hotel deals across California declined only slightly (just 1.6% from the first half of last year), total dollar volume is down48.5%. The median price per room statewide of $149,262 represents a 7.2% drop from 2023.