The largest hotel in the county to change hands was the 260-room Sheraton Mission Valley
By Lori Weisberg | lori.weisberg@sduniontribune.com
PUBLISHED: August 5, 2026 at 3:09 PM PDT | UPDATED: August 5, 2026 at 5:30 PM PDT
San Diego County appears to be bucking a growing trend of lender-triggered hotel sales in California’s major counties, as foreclosures, notices of default and bankruptcies force owners to unload properties.
That’s the conclusion of a mid-year hotel sales report released this week by Orange County-based Atlas Hospitality Group. While hotel transactions in California — and the dollar volume of those sales — headed upward during the first half of 2026, the brokerage reported that 38 of the 128 hotels that changed hands were subject to lender actions in the period preceding the respective sales. Those transactions accounted for 28% of sales and 37% of the dollar volume, Atlas said.
Statewide, the number of individual hotel sales increased 13.3% over the same period in 2025, and dollar volume rose even more — 17.2% to $1.63 billion. In San Diego County, the number of hotel sales rose, from seven in the first half of 2025 to nine this year. But the sales in 2026 accounted for fewer rooms, and the dollar volume fell 31.4% to $143 million, from nearly $208.4 million a year earlier.
“We did something different this year with our survey, where we tracked the number of sales that were lender-driven by bankruptcy, foreclosure, notice of default, deed in lieu of foreclosure,” said Alan Reay, president of Atlas Hospitality Group. “What’s interesting is all the major counties — Los Angeles, Orange, Riverside, San Francisco, Alameda — had hotel sales driven by lenders. But in San Diego there were none.
“So investors are looking in these other markets where they can deal with motivated buyers to drive lower prices.”https://datawrapper.dwcdn.net/Si0W3/3/
San Diego’s single largest transaction was the sale of the 260-room Sheraton Mission Valley hotel, which had been owned by Ashford Hospitality Trust, a real estate investment trust that tends to invest in more upscale hotels, primarily in the U.S. The sales price was close to $45.3 million.
Many of the other local hotel sales involved much lower-profile properties in the county, from a budget-friendly, extended-stay hotel in Santee to a motel in Vista.
San Diego’s hotel real estate market is something of an aberration compared to much of the state, says Reay. Hotel revenue is largely up in San Diego and there is enough of a profit, “so that when you have to refinance at a higher interest rate, it still pencils out. That speaks volumes about San Diego as an investment market. You’re refinancing at higher rates, but you’re doing well enough that hotels can still service the debt.”
The largest hotel sale in the state was in Los Angeles County — The Edition West Hollywood, which changed hands for $211 million, according to Atlas. The sale was technically a deed in lieu of foreclosure, where the property was turned over to the lender to avoid the foreclosure process. The $211 million represents what the owner owed the lender.
In Orange County, three of the county’s seven sales were lender-owned, including a couple of boutique hotels in Laguna Beach and the 30-room Capistrano Coast House in Dana Point, Atlas reported.
Across the state, the hotel report noted that the properties changing hands tended to be larger. The median price of transactions, for example, rose 17.8% to $6.9 million, and the median property size increased from 49 rooms to 59.
As for the general market in San Diego, Reay says fewer properties are being offered up for sale.
“In other markets, they are, but every week you’re seeing the price reduced,” Reay said. “I’m sure there are deals where that may have happened in San Diego, but not anywhere near the extent of what’s happening in other markets.”