The most expensive hotel transaction last year in the North Bay was the Hyatt Regency Santa Rosa, which sold for $55 million, according to Atlas Hospitality Group.

CHERYL SARFATY | THE NORTH BAY BUSINESS JOURNAL | February 10, 2025, 11:59AM

Hotel sales across California last year proved anything but robust, the result of persistent economic pressures driven by higher financing and increased operational expenses, particularly in insurance and labor, according to a new industry report.

Still, 2024 delivered some year-over-year hope.

Individual hotel sales across the state last year declined by 6.4% — significantly better than the 45% drop that closed out 2023, according to Atlas Hospitality Group’s newly released 2024 Year-End California Hotel Sales Survey.

Total dollar volume of sales last year was down 10.4%, compared to a decline of 56.3% a year prior, according to Newport Beach-based Atlas.

Even these improvements, however, don’t bring expectations for a full rebound anytime soon.

“Looking ahead (in) 2025, hotel owners are unlikely to see significant relief,” Alan X. Reay, president of Atlas Hospitality, stated in the report. “With interest rates remaining high, lenders exercising caution in their lending practices and inflation outpacing revenue growth, the challenges for hotel owners are expected to persist.”

Reay told the Business Journal last week that unless there is a sizable decrease in interest rates, he sees economic challenges for hotels owners lasting another year or two.

In its 2024 Year-End California Hotel Development Survey released last month, Atlas reported similar reasons for mostly stymied projects: economic uncertainties continuing to have lenders feeling wary.

Regional hotel sales

In the North Bay, 23 hotels were sold in 2024 — scattered across the six-county region.

“Sonoma (County) had 10 sales last year and the other counties combined were at 11,” Reay said.

In addition to the 10 in Sonoma County, four hotels were sold in Napa County, another four in Mendocino County, and one each in Marin, Solano and Lake counties, according to Atlas.

The most expensive hotel transaction last year in the North Bay was the 253-room Hyatt Regency Santa Rosa, which sold for $55 million, according to Atlas. That breaks down to $217,391 per room.

The second- and third-largest hotel sales in the region also were in Sonoma County. They were the 142-room Best Western Sonoma Winegrowers Inn in Rohnert Park, and the 98-room Holiday Inn Express Santa Rosa North. They sold for $15,699 million and $15,250 million, respectively, according to Atlas.

In Napa County, the biggest hotel sale was for the 7-room The Francis House in Calistoga, which sold for $9.6 million. Mendocino County’s largest hotel sale was the 63-room Comfort Inn & Suites in Ukiah, which sold for $8.9 million, according to the report.

The smallest hotel sale in the North Bay was the 20-room Sandpiper House Inn, a Mendocino County property in Elk, which sold for $532,000, according to Atlas.

The three North Bay counties Atlas reported with one hotel sale each were the 22-room Tamalpais Motel in Mill Valley in Marin County, which sold for $3.5 million. In Solano County, the 20-room Bays Inn in Vallejo sold for $1.9 million. The hotel sold in Lake County was the 9-room Featherbed Railroad Company in Nice. It sold for $1.6 million.

Statewide numbers

The most expensive transaction in California last year was the 686-room Hyatt Regency in downtown San Francisco, which sold for $290 million, according to the report.

In Southern California, the largest hotel sale was in Orange County. The 294-room Residence Inn Anaheim Resort sold for $179.2 million, according to Atlas.

Meanwhile, the Northern California county with the highest total dollar volume of sales last year was San Francisco (30%), followed by Sonoma County (12%) and Sacramento and Alameda counties (both 9%), according to Atlas.

Total dollar volume of sales in Southern California was highest in Orange County (29%), followed by San Diego County (27%), and Los Angeles County (22%), according to the report.