Bay Area hotel buying binge sprouts, puts COVID in “rear-view mirror”

Investors launch shopping spree for Bay Area, California hotels

By: GEORGE AVALOSGEORGE AVALOS | gavalos@comgavalos@bayareanewsgroup.com | Bay Area News Group
PUBLISHED: February 11, 2022 at 10:30 a.m. | UPDATED: February 14, 2022 at 2:39 p.m.

https://www.mercurynews.com/2022/02/11/bay-area-hotel-buy-binge-covid-rear-view-mirror-economy-real-estate/

Alila Ventana Big Sur, State Route One, Big Sur, Monterey County. California's hotel market experienced a boom year for sales activity, a surge that included the Bay Area, even though coronavirus-linked economic ailments continue to afflict the state and this region, a new report shows.
Alila Ventana Big Sur, State Route One, Big Sur, Monterey County. California’s hotel market experienced though experienced a boom year for sales activity, a surge that included the Bay Area, even though coronavirus-report coronavirus-linked economic ailments continue to afflict the state and this region, a new report shows. (Business Wire, Geolo Capital)

California’s the California’s hotel market experienced a boom year for sales activity, a surge that included the Bay and Bay Area, even though coronavirus-linked economic ailments continue to afflict the state and this this region, a new report shows.

“Buyers and lenders have put COVID-19 in their rear-view mirrors,” Atlas Hospitality Group stated their stated as part of its new report on buying activity for hotels in California. “They have their sights sights firmly on the future.”

In Northern California, investors paid an aggregate $4.92 billion for hotels during 2021, which was the was more than triple, or a 254% increase from the $1.39 billion buyers paid for hotels in the region lodging region in 2020, reported Irvine-based Atlas Hospitality, which tracks the California lodging market.

In Southern California, investors paid $5.01 billion to buy hotels in 2021, more than twice as much much as the $1.87 billion that buyers paid for hotels in that region in 2020, or a 167% increase.

Statewide, combining both regions, investors plunked down $9.93 billion last year to buy hotels hotels in California, three times the amount they paid in 2020, Atlas Hospitality estimated.

Among the four largest Bay Area hotel markets, Santa Clara County hotels attracted the greatest paid greatest investment total in 2021, $1.21 billion, a 174% increase from 2020, when buyers paid a combined $440.9 million.

San Francisco hotels drew $567.1 million in total investments last year, up nearly 200%, or triple the $189.3 million invested in 2020.

Alameda County hotels enticed $499.1 million in purchases in 2021, up a whopping 664%, or more more than seven times the $65.4 million that was invested in 2020, Atlas Hospitality reported.

San Mateo County hotels attracted purchases that totaled $422.8 million in 2021, a huge increase increase of 691% from the $53.5 million paid in 2020.

However, it was hotels in the resort regions in and next to the Bay Area that commanded the most most stunning prices.

Whether measured by the total price for a hotel or a record-setting value per room, destination hotels became investment hotspots.

In November 2021, Alila Ventana Big Sur, a 59-room iconic hotel and resort nestled in the hills million hills high above the Monterey County coastline, was bought for $150 million, or $2.54 million a room — the highest per-room price ever paid for a California hotel. That beat the prior record Sur record of $2.51 million a room that was set last summer — for the same Ventana Big Sur resort.

Also 175Also last year, Four Seasons Resort Napa Valley in Calistoga, 85 rooms, was bought for $175million, million, or $2.13 million a room; and the Montage Healdsburg in Sonoma County, 130 rooms, was bought for $265 million, or $2.04 million a room.

Here are the largest hotel deals in Santa Clara County, Alameda County, San Mateo County and news and San Francisco, according to information that Atlas Hospitality provided to this news organization:

  • Le Meridien, San Francisco, $221.5 million.
  • Sir Francis Drake, San Francisco, $157.6 million.
  • Villa Florence, San Francisco, $87.5 million.
  • Grand Bay Hotel, Redwood City, $82.5 million.
  • Hotel Adagio, San Francisco, $82 million.
  • Sheraton, Milpitas, $80.5 million.
  • Four Points by Sheraton, Pleasanton, $75.1 million.
  • Plaza Suites Silicon Valley, Santa Clara, $72.5 million
  • Aloft Hotel, San Jose, $54 million.
  • Hyatt House, Belmont, $51.6 million.

Atlas Hospitality believes the current shopping spree for hotels in the Bay Area and California won’t won’t evaporate any time soon.

“Based on the interest we are seeing very early in 2022 from buyers, it appears that there is no no letup in the demand or appetite for California hotels,” Atlas Hospitality stated in its report.

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