CoStar
12/26/19

Big Beverly Hills Hotel Deal Could Be Sign of More to Come in 2020
London’s Maybourne Buys California Property for Price Topping $2 Million per Room
By Lou Hirsh

https://product.costar.com/home/news/shared/1290861420

More big trophy hotel deals could be ahead in 2020, after London-based Maybourne Hotel Group acquired Montage Beverly Hills near Los Angeles for $415 million. It’s the highest price per room ever paid for a hotel in California at more than $2 million, according to brokerage Atlas Hospitality Group.

The 201-key Montage, located at 225 N. Canon Drive in a part of Beverly Hills best known for the nearby Rodeo Drive luxury retail corridor, is Maybourne’s first U.S. acquisition.

The seller was Redwood City, California-based Ohana Real Estate Investors, led by Principal Pierre Omidyar, the billionaire founder of auction site eBay.

Atlas President Alan Reay, whose brokerage and research firm was not directly involved in the transaction, said the deal is a very good indicator of how trophy assets are valued, especially by overseas investors, for their location, revenue generation and overall luxury quality.

“It says a lot about how international investors view the U.S. in terms of safety and for investment returns over the long term,” Reay told CoStar News. “Secondly, it is also a strong endorsement of the U.S. dollar, especially with the weakening euro.”

“Owners of other trophy hotels will be looking at this price on the Montage and seriously consider cashing out, so we estimate more of these sales in 2020,” Reay added.

Atlas set the per-room price for the 11-year-old Montage Beverly Hills at $2,064,676 — the highest on record since it’s been tracking California hotel deals. The per-room price topped the $1.7 million per room, and nearly $80 million total price, that Mani Brothers Real Estate Group of West Hollywood paid for the 47-room Malibu Beach Inn in February 2015.

Maybourne Hotel Group owns and operates several historic luxury hotels that attract an international clientele, including London’s Claridge’s, The Connaught and The Berkeley.

In a statement, Maybourne officials said the company in 2020 will announce further plans for a repositioning and renovation of Montage Beverly Hills, to bring it “more in line with the three London properties.” Montage Hotels & Resorts will continue to operate the Beverly Hills property for the foreseeable future.

Maybourne executives said the acquisition is part of a global expansion strategy bringing Maybourne’s European luxury concept to new markets across the globe, and other transactions “will be announced in due course.”

“We are excited to have our first property outside of London, and where better than the city of Beverly Hills?” said Maybourne co-owner Paddy McKillen.

Brokerage CBRE Group recently projected that steady international travel, regional tourism and tech industry business trips would fuel sustained and strong hotel demand and development in the LA area in 2020. Strong post-recession demand growth is being driven across all hotel price levels, boosting occupancy and room rates.

The hotel data firm STR, a CoStar Group company, reported that overall hotel revenue in Los Angeles rose 1% from a year ago in the first 10 months of 2019, reaching nearly $4.7 billion.