Atlas in the news

Lousy market torpedoes hotel projects and openings statewide By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News Group PUBLISHED: January 17, 2024 at 1:50 p.m. | UPDATED: January 18, 2024 at 6:17 a.m. SAN JOSE — Hotel construction and new openings have cratered in the Bay Area and throughout California, fresh evidence of a brutal commercial real estate market statewide, a new report shows. The post-coronavirus pandemic struggles for the lodging sector appear to have eroded the hotel market in a big way, according to a yearly survey released by Irvine-based Atlas Hospitality Group. “The rapid increase in interest rates, together with lenders pulling away from making hotel construction loans is definitely having a negative impact on hotel development in California,” Atlas Hospitality stated in its report. An estimated 17 hotels with a combined total of 1,987 rooms were constructed in 2023 in the Bay Area, the Atlas Hospitality report determined. Those numbers represent a sharp decline from Bay Area totals for 2022, when 25 hotels with a combined total of 2,709 rooms were built, according to Atlas Hospitality, which tracks the California lodging market. In 2023, the number of hotels built in the Bay Area plunged 32% from 2022, while the number of constructed rooms fell…

Downtown Hotels Open in Late 2023 BY BRYNN SHAFFER | JANUARY 8, 2024 As the 96-year-old Ace Hotel Downtown Los Angeles closes its doors at the end of the month, as announced in an Instagram post in December, another downtown hotel has opened. Sonder Holdings Inc., a modern tech-enabled hospitality service based in San Francisco, unveiled its latest property, The Craftsman, just one month ago. Located at 208 W 8th St., the apartment-style hotel is an adaptation of the former Lane Mortgage Building – originally intended for office use – now featuring 110 rooms over 12 stories. The 1923 property was designed by Los Angeles architect Loy Lester Smith and sits directly across the historic Apple Tower Theater. It has since been completely renovated. “The Craftsman will be a wonderful addition to the downtown community, and I’m thrilled that the historic Lane Building is embarking on a new chapter as a Sonder property,” Shahram Delijani, a principal at downtown-based Delson Investments LLC, the owner of the building, said in a statement in anticipation of the hotel’s opening. Hospitality group Sonder has been rapidly expanding and opened another hotel downtown, named The Winfield, only a few months before that. “We’re excited to continue expanding in…

After $70M renovation of SF hotel, it’s a question of “throwing good money after bad” JAN 4, 2024, 5:02 PM | By Emily Landes Highgate Hotels has missed a balloon payment on about $250 million in debt attached to the Hyatt Regency Downtown SOMA, according to loan documents and special servicer commentary cited by Trepp.  The missed payment comes about a year after completion of a $70 million renovation of the 686-room hotel. The New York City-based hospitality property owner was up to date on its payments until last month, when the loan came due.  It bought the hotel for $315 million at the end of 2018. At the time, the property at 50 Third Street was known as the Park Central Hotel, the same name as an NYC property that Morgan Stanley-owned Highgate also bought for $366 million.  The two sister properties were purchased together from Pebblebrook, TRD reported at the time, using $250 million in financing from Blackstone. Pebblebrook was divesting hotels it gained through a merger with LaSalle Hotel Properties. The 36-month, interest-only loan was originally due to mature in December 2021, according to loan documents, but appears to have been extended for two years. Highgate did not reply to…

December 13, 2023 | Bianca Barragán The Ace Hotel DTLA will cease operations at the end of January.   “It’s been an honor to inhabit these hallowed halls and The Theatre for ten golden years, which feels as good a run as any,” an Instagram post on the Ace Hotel’s account says. “We hope to be back before long and leave remembering something Mary Pickford, metaphorical matriarch of Ace DTLA, said: The future is yet in your power.” The hotel opened in 2014, when Downtown was making a powerhouse recovery from the Global Financial Crisis.  “The owners of the building that houses Ace Hotel Downtown Los Angeles, as well as The Theatre at Ace DTLA, have recently elected to convert the property to a limited-service, rooms-only operation, managed via a tech platform,” representatives for Ace DTLA told the Los Angeles Times, adding the theater would be managed separately and the last day of Ace service would be Jan. 31.  The Ace Hotel building and its adjacent former United Artists theater are owned by Aju Continuum, formerly Aju Hotels & Resorts, a subsidiary of South Korea-based Aju Group, according to the Los Angeles Business Journal and public records. The entity bought the properties for $117M in 2019.  At…

By Patricia Kirk | Nov 27, 2023 8:00am Climate-related events are affecting where and when tourists visit U.S. destinations and will continue to play a role in vacation decisions as Climate Change worsens.  A 2021 study by the National Institutes of Health on the impact of Climate Change on tourist destination decisions, which was published in JAMA, concluded that climate, including precipitation, wind, humidity, temperatures, ecosystems and animals are essential consideration of places where  tourists choose to visit, especially when seeking a nature experience and outdoor activities. Over the last year, US tourist destinations have been hit hard by wildfires, hurricanes, floods, heat waves, drought, and tornadoes, all of which impact hotel rates and occupancy. Alan Reay, president of Irvine, Calif.-based, Atlas Hospitality Group, says, for example, that hotels in Page, Arizona, suffered last year due to drought when the water level at nearby Lake Powell, one of the nation’s largest reservoirs and a popular sailboat destination, dropped to 26 per cent of capacity and some portions dried up, according to Nasa’s Earth Observatory. Reay, whose research and advisory firm focuses on the California’s hospitality firm, cites as examples, the recent wildfires in Maui that emptied the island’s hotels of tourists and are…

December 10, 2023 |  Bianca Barragán The Los Angeles City Council last week finalized a deal that removes a measure from the March 2024 ballot that would have required hotels across the city to offer vacant rooms to unhoused Angelenos and replaces it with a series of new regulations to the approval process for new hotels.  Hotel trade groups embraced the new regulations as a favorable alternative to what had been proposed. But others in the industry expressed concern over the implications of these new regulations, in addition to preexisting macroeconomic conditions, on new hotel development.  A release from the Hotel Association of Los Angeles called the removal of the original measure and the concurrent approval of the replacement regulations a victory for Los Angeles and its hospitality community. The initial measure would have thrust hotel employees onto the front lines of a citywide crisis in asking hotels to provide shelter to unhoused populations, the organization said. “This solution ensures that our hotel community is thriving and able to continue providing excellent careers and economic benefits to our iconic neighborhoods throughout Los Angeles,” Hotel Association of Los Angeles President and CEO Heather Rozman said in a statement.  New regulations would require new hotel developments to replace any…

November 30, 2023 | Bianca Barragán, Southern California  It’s hard out there for Los Angeles-area hoteliers, but many are steadfast in their belief that better times are just around the corner — for those that can hang on.  Atlas Hospitality Group President Alan Reay told the audience at Bisnow’s Los Angeles Hospitality Summit at the Omni Hotel and Resort Los Angeles that year-to-date, Los Angeles County hotel sales are down nearly 80% compared to the same period in 2022. Just 17 hotels have sold so far this year, in stark contrast to the 79 that traded in the same period last year. “There’s only ever been one time that we’ve seen such a decline like that, and that was back in 2009,” Reay said.  That slowdown in transactions is keeping a vicious cycle rolling.  “The problem with underwriting in LA today is that you don’t have an exit that you can underwrite,” said Adrienne Jubb, Aimbridge Hospitality senior vice president of development and acquisitions. “It’s hard to get investors excited about LA because of the lack of exits,” Jubb added.  Panelists touched on “social issues,” such as the growing unhoused population, as another headwind facing Los Angeles.  “Branding is very important,” The Athens Group Chief Operating Officer Jay…