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REAL ESTATEHOSPITALITY REAL ESTATE

Hotel Sales Sustained a Dismal 2023 BY BRYNN SHAFFER | FEBRUARY 19, 2024 California hotel sales plummeted last year, according to Atlas Hospitality Group, which recently released its 2023 end-of-year hotel sales survey. “The big jump-out is the dramatic or steep decline in number of transactions and dollar volume,” said Alan Reay, president of Atlas Hospitality Group, who’s been tracking California hotel sales for more than 20 years. “This is the steepest decline we’ve seen in the last 20-plus years, except for one year, and that was 2009.” Last year, individual hotel sales were down 45% over 2022 statewide, illustrating the second largest percentage decline in the last 15 years. Sales volume declined by 56%, the second steepest decline in sales volume in the last 15 years as well. For Reay, the biggest culprit behind these staggering numbers was the increase in interest rates. “What we have now is a disconnect between what buyers are willing to pay and what sellers want to sell for,” he said. “And that’s because sellers are used to what prices were in 2022 when interest rates were 50% below what they are today.” And within Los Angeles specifically, Measure ULA – the one-time real estate transfer…

Bullish Los Angeles beckons hotel investors

BY STEFANI C. O’CONNOR | FEBRUARY 13, 2024 Politics, economics, taxes, lending environment shape lodging landscape in the City of Angels. LOS ANGELES — As a city bullish on enhancing itself as a tourist mecca — ostensibly to ensure its lodging base flourishes—Los Angeles as a destination for hotel investors presents more as a mix of select opportunities and potential red flags. On one hand, market confidence-builders include a phased [ongoing] $30 billion investment to modernize Los Angeles International Airport (LAX); the opening this year of the L.A. Clippers new home, the Intuit Dome; the debut next year of the [George] Lucas Museum of Narrative Art; and subsequently, the FIFA World Cup and NBA All-Star Game (2026); Super Bowl LXI (2027); and the Summer Olympic and Paralympic Games (2028). In contrast, area politics and economics have been among key concerns for both existing and potential hotel investors of late, as much of it toggles to alleviating the plight of the homeless and broadening the scope of affordable housing in L.A. “Los Angeles, other than downtown, has been a historically under-supplied market; barriers to new supply are much higher today,” said Daniel Peek, president and chief operating officer at Hodges Ward Elliott. He…

Hotel Sales Are Still Diving in California

Investors are not in a hospitable mood as trade value drops by 56%. By Jack Rogers | February 15, 2024 at 06:53 AM Investment sales in hotels plunged by more than 56% in California in 2023 as investors kept their powder dry waiting for better market conditions—the steepest cliff-dive for the hospitality sector in the Golden State since the global financial crisis. Hotel transactions in California totaled $3.76B last year, less than half of the $8.6B in hotel sales volume in 2022. The 2023 tally is the lowest since 2009, when sales of hotels in the Golden State dropped by 75%. The plunge in hotel sales was more pronounced in Southern California, which saw its 2022 total of $5.8B pared to $2.3B in 2023. Sales in Northern California dropped to $1.45B last year, compared to $2.8B the previous year, according to the annual California Hotels Survey from Newport Beach-based Atlas Hospitality Group. The contraction looks worse when you consider the fact that SoCal’s total includes a $760M transaction: the foreclosure sale of the Fairmont Century Plaza Hotel. The largest deals in Northern California included a May transaction in which Redwood City-based Ohana Realty bought the 276-room Claremont Hotel Club & Spa in the…

Hotels On The Rebound, But Hospitality Property Sales Remain Grounded

Margaret Jackson | Mon, Feb 12, 2024, 9:43 AM PST Hotels may be performing better than they were during the pandemic, but that’s not propelling sales of hospitality properties any higher. Individual hotel sales in California plunged 45%, from 483 in 2022 to 265 in 2023, according to a CoStar report on Atlas Hospitality Group’s annual year-end California Hotels Survey. Dollar volume dropped 56.3% to $3.75 billion — the second-largest year-end drop in 15 years. In 2009, there was a 75% decline. “If I’m operating today, and my hotel is operating well, I’m not going to sell in today’s market because I’m used to what the prices were 12 to 18 months ago,” Atlas Hospitality Group President Alan Reay told CoStar. The cost of capital is what’s keeping sales stagnant. Higher interest rates can cause a property’s valuation to decline by millions of dollars. The pandemic brought higher sale prices because of the combination of lower interest rates and a ton of built-up capital. Federal regulators kept the number of distressed properties down by allowing lenders to be more flexible. Stimulus dollars distributed to individuals and businesses also helped. “There was a tremendous amount of tax money pummeled into the economy so…

5 Things To Know for Feb. 6

Today’s Headlines: Eric Danziger Retires as CEO of Braintree Group; Weather Patterns Disrupt Travel Globally; California Hotel Sales Drop by 45%; Majority of Hotels Report Staffing Shortages; FIFA Reveals 2026 World Cup Locations By Dana Miller | Hotel News Now | February 6, 2024 | 7:29 AM 1. Eric Danziger Retires as CEO of Braintree Group Hotel industry C-suite veteran Eric Danziger, CEO of Braintree Group and Resolute Road Hospitality, is retiring but will remain active on the board of directors. He has more than 50 years of hospitality industry experience. Danziger joined commercial real estate investment company Braintree Group in 2022. The company rebranded its Braintree Hospitality arm as Resolute Road Hospitality in 2023 to expand into third-party management. Danziger previously served as CEO of Trump Hotel Group for six years, joining the company in August 2015. Before that, he was president and CEO of Starwood Hotels, president and chief operating officer of Carlson Hotels Worldwide and president and CEO of Wyndham Hotel Group. 2. Weather Patterns Disrupt Travel Globally Travel across China for the start of the Lunar New Year holiday this weekend is already facing complications from snow and freezing rain. This year was projected to achieve a return to normal levels of…

Hotel Deals Plummet in Northern and Southern California Amid Economic Uncertainty

By Delia Reynolds | 2024-02-06 Hotel deals implode in Bay Area and California as economy turns murky Acquisitions of hotels plunged by 48.3% in Northern California and by 60.2% in Southern California Statewide, hotel purchase activity plummeted 56.3% in 2023 in California. The decline in sales activity is a result of hotel buyers staying on the sidelines at a time of economic uncertainty. Some hotels tumbled into foreclosure during 2023, while in other cases, hotel property owners simply walked away from making payments and gave the keys to their lenders Hotel deals implode in Bay Area and California as economy turns murky The market for hotel purchases has nosedived in both the Bay Area and California, indicating that investors believe the weakness in the lodging sector has yet to run its course. Impact of Economic Uncertainty Following Alan Reay, president of Atlas Hospitality Group, most investors are in a wait-and-watch situation due to economic uncertainty, leading to a decline in hotel purchase activity. Foreclosure and Abandonment Some hotels tumbled into foreclosure during 2023, while in other cases, hotel property owners simply walked away from making payments and gave the keys to their lenders.

Atlas Hospitality Group’s Year-End Survey: Understanding the Decline in California Hotel Sales

By The Registry Staff The Atlas Hospitality Group’s Year-End 2023 California Sales Survey revealed a substantial downturn in hotel sales across the state, characterized by a 45 percent decline in individual sales — a figure only eclipsed by the recession year of 2009. Sales volume decreased by over 56 percent, marking the second steepest decline in 15 years. Despite these challenges, the median price per room experienced a modest decline of just over one percent, maintaining its position as the second-highest on record. “2023 is the year we saw the second steepest decline in hotel sales in California over the last 15 years. The rapid increase in interest rates has created a huge disconnect between buyer and seller expectations and we have a huge number of buyers now sitting on the side lines waiting for distressed hotel sales,” said Atlas Hospitality Group President Alan Reay. Southern California Highlights Los Angeles County faced a 55 percent decrease in transactions, with a total dollar volume decline of over 35 percent. Despite this, the average sales price per room saw a 5 percent increase, albeit with a 17.6 percent drop in median price per room. The sale of the 400-room Fairmont Hotel at…

Tom York on Business: San Diego Shines, Bucks Statewide Decline in Latest Hotel Sales Survey

The president of Orange County hotel broker Atlas Hospitality Group has some good news for San Diego’s all-important hospitality sector. He says that sales of hotels in San Diego were up nearly 28%, according to his Atlas annual 2023 Year-End California Hotel Sales Survey. “San Diego County stands out in our 2023 survey as it saw the highest increase in the median price per room of any of the counties in the state- up 27.5,” Alan Reay told the Times of San Diego. “This shows how desirable hotels in the region are to investors as many view the market as having a much more diverse economic base than most of the other markets in the state, that is not heavily relying on any one industry, such as tech ( see what has happened in San Francisco and San Jose, for example).” “We see the demand for San Diego hotels continuing for all product types and locations,” he said. “It’s hard to see weakness in the local market and with all of the negative publicity we are seeing in cities like San Francisco, Los Angeles and Oakland (crime and homeless), “This will only drive more meetings/convention business to San Diego” he concluded. San Diego had a near 24% decrease…

Hotel sales plummet in California with deal value falling 53%

In NorCal, volume totals $1.45B as investors take “wait-and-watch” stance to hospitality FEB 7, 2024, 11:36 AM | By TRD Staff The hotel market in California has tumbled down the laundry chute. The overall money spent to buy hotels across the Golden State fell 56.3 percent last year, as investors waited along the sidelines of the lodging sector, the San Jose Mercury News reported, citing figures from consultancy Atlas Hospitality Group. Measured by dollars, California hotel deals totaled a combined $3.76 billion last year, compared with $8.6 billion in 2022.  In Northern California, acquisitions of hotels last year plunged by 48.3 percent, and by 60.2 percent in Southern California. The decline in sales is because hotel buyers stayed out of the market at a time of economic uncertainty and murky prospects for the lodging sector, according to Alan Reay, president of Irvine-based Atlas Hospitality. “Most investors are in a wait-and-watch situation,” Reay told the Mercury News. Last year, Northern California hotel purchases totaled $1.45 billion, down from $2.8 billion in 2022. The biggest deals included $163 million paid for the 276-room Claremont Hotel Club & Spa in the Oakland and Berkeley market; $73.1 million paid for the 264-room Signia by Hilton…

News briefs: Deals tumble in Cali; meet Ella Hotels; Danziger retires

BY JEFFREY WEINSTEIN | FEBRUARY 6, 2024 Breaking news about development, M&A, data and more. Deals tumble in California. California Hotel Sales Survey for end of year 2023 showed that statewide, hotel deals plunged 56.3% (48.3% in Northern California; 60.2% in Southern California), Atlas Hospitality Group reported. Northern California deals hotel totaled $1.45 billion, down from the 2022 total of nearly $2.8 billion. Southern California purchases had a value of $2.31 billion in 2023, down from $5.8 billion in 2022. California hotel purchases totaled a combined $3.76 billion, compared with nearly $8.6 billion in 2022, according to the Atlas Hospitality survey. Meet Ella Hotels. London-based alternative investment firm H.I.G. Capital has combined their hotel assets to create Ella Hotels & Resorts, a luxury, lifestyle and hotel group operating a collection of sustainable “eco-chic” resorts across Southern Europe. Following a phased development and refurbishment plan, Ella’s portfolio will be comprised of 13 hotels wit 4,500 rooms in five of Greece’s key tourist destinations. The group projects that Ella’s current portfolio will command a value in excess of €1 billion. Ella plans to expand further into additional, established Mediterranean holiday destinations, focusing on opportunities in Spain, Portugal, and Italy, with a target of reaching 10,000 total rooms in…

Hotel deals implode in Bay Area and California as economy turns murky

Dollar value of hotel purchases nose dives in 2023: new report By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News Group PUBLISHED: February 6, 2024 at 8:00 a.m. | UPDATED: February 7, 2024 at 4:32 a.m. SAN JOSE — Hotel purchases have nose dived in the Bay Area and across California, in a sign that investors believe the weakness in the lodging sector has yet to run its course. Measured by dollar amount, acquisitions of hotels plunged by 48.3% in Northern California and by 60.2% in Southern California, Atlas Hospitality reported. The Northern California market includes the Bay Area. Statewide, hotel purchase activity plummeted 56.3% in 2023 in California. This represents the second-worst decline ever documented by Atlas Hospitality Group, which tracks the lodging industry in the state. These were the highest-priced hotel deals in the Bay Area in 2023, according to the Atlas Hospitality Survey:— Claremont Hotel Club & Spa in the Oakland-Berkeley area. The 276-room hotel resort was bought for $163 million.— Signia by Hilton South Tower in downtown San Jose. The 264-room southern tower was bought for $73.1 million. It’s being converted into housing for San Jose State University students.— Hotel Zoe in San Francisco. The 221-room hotel was bought for $68.5 million. The…

Cost of Capital Drives 45% Drop in California Hotel Deals

Decline in 2023 Is Second Only to 2009 By Bryan WrotenHotel News Now February 6, 2024 | 6:04 AM California’s individual hotel sales dropped 45% year over year in 2023, surprising no one. What did come as a bit of a surprise for Alan Reay, president of Atlas Hospitality Group — which produced its annual year-end California Hotel Sales Survey — is that the decline wasn’t deeper given that sales were down 53% halfway through the year. It was during the second quarter of 2022 that interest rate increases kicked in, so Reay expected to see a bigger drop when comparing the remainder of the two years, he said. The survey reports individual sales dropped from 483 in 2022 to 265 in 2023. Total dollar volume fell 56.3% to $3.75 billion. The year-end drop in dollar volume was the second largest in 15 years, with 2009 experiencing a 75% decrease. The median price per room dipped 1.08% to $150,000, but it was still the second-highest median price per room that Atlas has recorded. Performance Does Not Equal Value Hotels are performing much better now than they were during the pandemic and early parts of the recovery, Reay said. That’s not enough,…

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