Atlas in the news
Tom York on Business: Gov. Newsom’s Project Homekey Kept California Hotels Afloat in 2020
https://timesofsandiego.com/business/2021/02/22/tom-york-on-business-gov-newsoms-project-homekey-kept-california-hotels-afloat-in-2020/ by Tom York Times of San Diego Orange County hospitality expert Alan Reay recently released his annual 2020-year-end survey of hotel sales transactions in the state. The report is always of interest because of the importance of hotel industry to the state and San Diego economy. Some highlights of the report: COVID-19 had a “devastating impact” on the number of sales in the United States, except in California. Indeed, California is the only state to record an increase in hotel sales. The jump was 52% statewide. That’s due to Project Homekey, Gov. Gavin Newsom’s sweeping plan to protect the homeless from the COVID-10 pandemic. The program had a huge impact on statewide sales for the year. Under the program, the state purchased $500 million worth of hotels to help house the homeless during the COVID-19 pandemic. Without those transactions–many purchases coming late in the year—statewide sales would have been off 30%, with dollar volume off 60%. San Diego hotel sales overall fared OK in 2020, but dollar volume was way down. During the year, 22 hotels were sold, up from the 20 in 2019. Those 22 sales totaled $300 million for 2020, off 61% in 2019, when sales totaled $767 million. The largest…
Pebblebrook has bashed S.F. and is unloading a local hotel. Here’s what the CEO now says about the market.
https://www.bizjournals.com/sanfrancisco/news/2021/02/25/jon-bortz-raymond-martz-pebblebrook-sf-hotel-drake.html By Alex Barreira Staff Reporter, San Francisco Business Times Feb 25, 2021 Updated Feb 25, 2021, 2:40pm PST In the dog days of last summer, Pebblebrook Hotel Trust CEO Jon Bortz was more apt to spit at San Francisco than sing its praises. Pebblebrook owns 12 hotels here — about 10% of the city’s room count — and at that point the Maryland-based real estate investment trust was burning about $9 million each month while the city remained the only major market in the U.S. not to allow hotels to accept leisure guests. The hotel industry was at “the precipice of a cliff” and the streets looked like “a scene from ‘Mad Max,’” he told me then. The company (NYSE: PEB) is still burning through lots of cash — about $20 million per month across its U.S. portfolio, per its fourth quarter earnings this week — and 10 of its hotels are still closed here, but Pebblebrook’s mood on San Francisco is considerably more upbeat these days. The top brass at Pebblebrook, known for having a bit more color than your typical run-of-the-mill REIT, spoke quite a bit about the city during an earnings call this week, both in prepared remarks and in response to…
Pandemic’s Effect on California Development Could Increase Hotel Values
https://www.costar.com/article/486141428?utm_source=newsletter&utm_medium=email&utm_campaign=hospitality_prospect&utm_content=p2 California’s Project Homekey Boosted Transaction Volume By Bryan Wroten Hotel News Now Feb 17, 2021 | 8:52 AM The COVID-19 pandemic has had opposite effects on California hotel transactions and development in 2020, slightly increasing the number of deals while slowing the pace of new construction. The slower pace of development and delayed openings last year, combined with temporary and permanent closures, resulted in a decline in California hotel supply in 2020, creating an unusual situation for hoteliers going forward, said Alan Reay, president of Atlas Hospitality Group. Reay’s company released its California Hotels Sales Survey 2020 Year-End Tuesday and its 2020 full-year development survey in late January. The sales survey found that while hotel sales in every other U.S. state fell compared to 2019 — even by as much as 62% in New York and 54% in Texas — California’s sales volume increased by 0.3%. Of the 298 hotel transactions in California amounting to nearly $3.3 billion last year, the state of California acquired 78 hotels for $890 million through Project Homekey. Without Project Homekey, California’s sales volume would have been down 26%, and the total dollar volume would have decreased by 61% instead of 46% compared to 2019. “There’s…
S.F. hotels have 83 million new reasons to sell to Project Homekey
https://www.bizjournals.com/sanfrancisco/news/2021/02/17/newsom-homekey-peskin-homeless-hotels-sale.html By Alex Barreira – Staff Reporter, San Francisco Business Times Feb 17, 2021 Updated Feb 17, 2021, 8:13pm PST A recent shift in federal policy has freed up $83 million in local funding for a state program meant to convert hotels into permanent housing, sweetening the pot for struggling hotel owners to flip their properties at alluring above-market rates. Last summer, Gov. Gavin Newsom launched Project Homekey, incentivizing hotel owners to sell their properties to local governments that would then convert them into permanent housing shelters at a fraction of the cost of new construction. The project drew dozens of interested sellers in San Francisco and turned the California hotel sale market into a national outlier — the only place where sales increased significantly amid the horrendous pandemic market. Now extra funds are at the city’s disposal to potentially buy more hotels. In January, the Biden administration announced it would reimburse city governments through the Federal Emergency Management Agency for 100% of the costs related to shelter-in-place hotels, covering January 2020 through October of this year. Because San Francisco had been shouldering these costs with the expectation of a 75% FEMA reimbursement under the Trump administration, the policy change freed up $83 million of general fund…
OC New Hotel Rooms Double in 2020
OC New Hotel Rooms Double in 2020 | Orange County Business Journal (ocbj.com) JW MARRIOTT, RADISSON BLU LARGEST IN STATE TO OPEN By Katie Murar Monday, February 8, 2021 Orange County hotel development bucked statewide trends last year, with 1,401 new hotel rooms opening in 2020, more than twice the amount seen in 2019. California, meanwhile, saw a 28% drop in new hotel openings as “COVID-19 has continued to decimate the hotel market,” according to a report by Irvine-based hotel consultancy and brokerage Atlas Hospitality Group. Orange County was the only Southern California region to see an increase in new hotel supply last year, with Los Angeles and San Diego seeing a 5.6% and 60% drop, respectively. The pandemic continues to have “a huge impact as construction was put on hold in many cases and new openings delayed,” the Atlas report said. Anaheim, Lake Forest Openings Seven hotels opened in Orange County last year, the largest being the 466-room JW Marriott Anaheim and the 326-room Radisson Blu Hotel Anaheim. These two properties near Disneyland also represented the largest hotel openings in the state last year. It’s the second consecutive year that OC has been home to California’s largest hotel opening. In…
Price for Sir Francis Drake could spell bad news for S.F. hotel market
What the Sir Francis Drake hotel sale says about the S.F. hotel market – San Francisco Business Times (bizjournals.com) By Alex Barreira – Staff Reporter, San Francisco Business Times Feb 8, 2021 San Francisco has a new hotel comp — and it’s not necessarily great news for the industry. The historic Sir Francis Drake hotel at Union Square is under contract to sell for $379,000 per room after closing costs, marking the first major hotel deal since the pandemic decimated the city’s convention and tourism industries. Hotel experts I spoke to say the price for the 416-room property — a total $157.6 million before closing costs — represents a substantial drop from pre-Covid values. Alan Reay, president of Atlas Hospitality Group, estimated the buyer scored a roughly 30% discount from the $225 million the hotel would have fetched in 2019, calling the sale “a fair price for both parties.” If it was sold last summer, before the rollout of coronavirus vaccines, the discount would have been steeper, at 50% to 60%, he said. “It’s not something I would look at and go, ‘That’s an absolute wholesale price for the buyer,’ ” Reay said. “It’s still a risk because they’re looking at a huge amount of…
Impact of pandemic on hotels to be felt for years
Monday, February 1, 2021 By Thor Kamban Biberman Like many industries throughout the world, the COVID-19 pandemic has dealt an enormous blow to the hotel industry, as noted by Atlas Hospitality Group president Alan Reay. One of the hardest hit firms has been Sunstone Hotel Investors. The Irvine-based firm lost $92.49 million in the third quarter last year, and more than $371 million through the first nine months of 2020. It recently handed back the keys to the 44-story, 478-room Hilton Times Square in Manhattan within the past few weeks. It also sold the Renaissance Los Angeles Airport for $91.5 million in December to help its balance sheet, Reay noted. Sunstone, which owns the Embassy Suites in UTC and a majority stake in the Hilton San Diego Bayfront, is far from being alone in its struggles, according to Reay. The famed Chateau Marmont Hotel in West Hollywood was on the verge of closing before its owners decided to turn the asset into a private club. The jury is still out on whether or not that will be a winning strategy. Other L.A. hotels haven’t been as lucky, Reay explained, noting the 139-room Standard Hotel in West Hollywood, has already closed….
COVID economy: Huge job losses hammer Bay Area hotels, restaurants
COVID economy: Big job losses hammer Bay Area hotels, restaurants (mercurynews.com) Hotel, restaurant job losses total nearly half-million in California By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News Group PUBLISHED: February 1, 2021 at 11:50 a.m. | UPDATED: February 2, 2021 at 6:49 a.m. SAN JOSE — Coronavirus-linked economic woes unleashed mammoth job losses for hotels and restaurants in the Bay Area and all of California last year, as business travel, tourism and dining out shriveled, an analysis of new reports shows. The Bay Area lost well over 100,000 hotel and restaurant jobs, a drop of 33.6 percent from 2019, according to figures compiled by Beacon Economics that were analyzed by this news organization. In California, the economic setbacks erased nearly a half-million lodging and dining jobs, a 29 percent drop from the prior year. “We’ll see a lot of hotel and restaurant jobs come back as we get the pandemic behind us,” said Jeffrey Michael, Stockton-based Center for Business and Policy Research at University of the Pacific. “But you won’t see all of those jobs come back. The hotel jobs connected to business travel and conventions won’t have as many jobs.” The hotel and restaurant sector nose-dived to a steeper degree than other industries that…
Pandemic Takes Toll on California Hotel Development Trends
https://www.costar.com/article/431511153?utm_source=newsletter&utm_medium=email&utm_campaign=hospitality_prospect&utm_content=p6 New Openings Drop by Nearly a Third in 2020 as Project Lending Remains Scarce By Lou Hirsh – CoStar News Jan 27, 2021 | 11:54 P.M. An almost 30% year-over-year drop in new California hotel developments and openings last year could be a sign of what’s to come in a state where hospitality demand typically has been among the highest in the nation. Many developers have put plans for new California projects on hold, and lenders remain wary amid the coronavirus pandemic’s devastating financial impacts. Irvine-based brokerage and research firm Atlas Hospitality Group, in its latest annual California development report, predicted that “the vast majority of hotels in planning will simply not get built or will be deferred for a lengthy period” as a result of the COVID-19 pandemic. The state’s hotel industry has been hammered since the pandemic brought global and domestic travel and conference business to a halt early last year. Data from travel research firm STR, a CoStar Group company, shows that pandemic-spurred plunges in occupancy rates, which shrunk by almost half from the prior year, caused total hotel revenue to drop 55% in Los Angeles County, 54% in San Diego County and nearly 60% in Orange…
Queen Mary Operator Files for Bankruptcy
https://labusinessjournal.com/news/2021/jan/25/queen-mary-operator-files-bankruptcy/ By Hannah Madans Monday, January 25, 2021 Eagle Hospitality Trust, the Singapore-based group that operates the iconic Queen Mary and the Sheraton Pasadena, has filed for Chapter 11 bankruptcy protection. In total, more than two dozen hotels and other properties were part of the filing by the company, which has more than $500 million in debt. Eagle Hospitality stopped trading on the Singapore Stock Exchange in 2019 after defaulting on a loan from Bank of America. While the company operates the Queen Mary, the city of Long Beach owns the property, and Eagle Hospitality has a ground lease. In a ground lease, different entities own the land and the improvements on the land. Ground leases on the water are not uncommon and can frequently be found in areas like Marina del Rey. The Queen Mary has been closed to the public since May due to the pandemic. Investment firm Urban Commons signed a lease to run the Queen Mary in 2016. In 2019, it created Eagle Hospitality Trust but ran into trouble. In the fall, the group ended its master lease agreements for Urban Commons hotels. Urban Commons owes hundreds of thousands of dollars of unpaid occupancy taxes to the…
Real estate: Owner of hotels in Bay Area files for bankruptcy
https://www.mercurynews.com/2021/01/21/real-estate-hotel-owner-bay-area-bankrupt-covid-economy-jobs-eagle/ Hotels in South Bay, Peninsula are caught up in owner’s bankruptcy By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News Group PUBLISHED: January 21, 2021 at 5:45 a.m. | UPDATED: January 21, 2021 at 3:32 p.m. SAN JOSE — The owner of two Bay Area hotels, one in San Jose and one in San Mateo, has filed for bankruptcy, grim new evidence of the widening economic woes the lodging industry faces while the coronavirus rages on. Eagle Hospitality Trust, which owns 18 hotels in the United States, including eight in California — the world-famous Queen Mary Hotel in Long Beach among them — has filed for a Chapter 11 bankruptcy in an attempt to reorganize its finances. Four Points by Sheraton San Jose Airport and Holiday Inn Hotel & Suites in San Mateo are among the hotels owned by Eagle Hospitality Trust, according to company documents and bankruptcy court records. Eagle Hospitality said 27 subsidiaries, formally known as corporate entities, were involved in the bankruptcy filing and that it’s possible buyers could be found for some or all of the 18 hotels. “The Chapter 11 entities intend to commence a marketing process to sell the relevant hotels,” Eagle Hospitality said in a release that announced…
Operator of Queen Mary in Long Beach files for bankruptcy protection
Operator of Queen Mary in Long Beach files for bankruptcy – Los Angeles Times (latimes.com) By HUGO MARTÍNSTAFF WRITER JAN. 20, 2021 3:48 PM The real estate investment trust that operates the Queen Mary in Long Beach and owns 26 other hotels filed for bankruptcy protection this week, signaling what could be the start of a wave of bankruptcies in the hospitality industry. The 85-year-old former ocean liner-turned-floating hotel has been suffering, like the rest of the nation’s hotel industry, from a dramatic drop in demand due to the COVID-19 pandemic. Eagle Hospitality Trust’s Chapter 11 filing represents the latest setback for the iconic vessel that Long Beach had hoped would be the crown jewel in an eventually thriving leisure district. The city of Long Beach, which owns the ship, issued a statement saying it will try to determine what Eagle Hospitality’s immediate plans are for the Queen Mary. The tourist attraction has been closed since May because of the pandemic. Eagle Hospitality Trust was created in 2019 by Urban Commons, the real estate investment and development firm that owns a 66-year lease to operate the Queen Mary and develop the 65 acres around it. The lease extends until 2082. The…
