By Alex Barreira – Staff Reporter, San Francisco Business Times | Jan 15, 2025

New hotel development fell sharply across California in 2024, particularly in the Bay Area.

A year-end survey released this week from lodging consultancy Atlas Hospitality counted just four new hotels across the nine-county Bay Area opening in 2024, down from 12 new hotels in 2023. Statewide, California in 2024 had the fewest new hotels and rooms deliver to market since 2014, and about 34% fewer new hotels than in 2023.

Atlas Hospitality President Alan Reay wrote in the report that increased cost of construction, rising interest rates and lenders pulling away from new hotel construction have all put downward pressure on new hotel development. He also noted increases in the number of hotels that have started then stopped construction and have since defaulted on their loans or are in bankruptcy.

“We predict that in the near term the future for hotel construction will remain weak as investors focus on purchasing existing hotels at discounts to replacement costs,” Reay wrote.

In 2023 about a dozen new hotels representing 1,613 rooms opened across the Bay Area, per Atlas. The four that opened in 2024 are:

• The Fairfield Inn & Suites Livermore, 111 rooms at 220 N Greenville Rd. in Livermore;
• The TownePlace Suites by Marriott Pleasanton, 110 rooms at 7260 Johnson Dr. in Pleasanton;
• The Evergreen Boutique Motel Corte Madera, 22 rooms, at 706 Meadowsweet Dr. in Corte Madera;
• and the Home2 Suites San Jose Silver Creek, 127 rooms, at 5952 Silver Creek Valley Rd. in San Jose.

San Francisco did not have a new hotel open in 2023 or 2024. Tthe report blames “overall hospitality and local market conditions.”

Other figures from the report suggest the Bay Area’s frozen hotel supply could begin to thaw in the next few years. Region-wide, the number of hotels under construction rose from 17 in 2023 to 21 in 2024, with a net add of 363 rooms.

Sonoma County saw the biggest change in 2024, with three new hotel projects reaching the construction stage representing a net 271 room increase. It has the most hotels under construction in the Bay Area, with six.

Santa Clara County is the second most-active locally, with four hotels representing 557 rooms under construction, the largest being the 254-room Treehouse Hotel in Sunnyvale (originally slated for delivery in late 2023).