Atlas in the news

Compromise requires builders to replace homes demolished by development By TRD Staff | JAN 22, 2024, 11:36 AM Hotel developers in Los Angeles must now replace homes demolished for hospitality suites. The City Council passed a law early last month requiring new hotel projects to replace displaced housing units on a one-for-one basis, Hotel News Now reported via CoStar News. The Responsible Hotels Ordinance favors affordable housing over new hotel developments. The legislation was a compromise between the council and Unite Here Local 11, a labor union advocating for affordable housing. As part of the compromise, the council rescinded a March 2024 ballot initiative supported by Unite Here that would have required hotels to make vacant rooms available to homeless residents. Instead, the new ordinance establishes a voluntary registry for hotels to notify the city about vacant rooms available for use as interim housing. Having to replace housing units is a deterrent for hotel developers, whose interest in building in Los Angeles had already ebbed. Alan Reay, president of consulting firm Atlas Hospitality Group, said it adds another obstacle, making it more challenging for developers to consider new projects in L.A. “When we’re talking about the city of Los Angeles,…

No new hotels opened in SF in 2023 JAN 19, 2024, 12:30 PM | By Daria Solovieva Last year wasn’t a walk in the park for California developers and the latest numbers show it. A biannual survey by brokerage firm Atlas Hospitality Group published this week indicated the hotel supply issues are likely to persevere through 2024. Last year, only 53 new hotels opened in California, totaling about 6,200 rooms, representing a 10 percent decline from 2022. That number marks the lowest number of rooms open since 2016, according to the firm’s data. “Not only do we have a very limited supply of new units coming online, and that’s because of customer money, financing, cost of construction have gone way up, and the lenders that were in the hotel construction business have pulled back from it, Atlas Hospitality’s Alan Reay said. “That will restrict development going forward.”  “But what we have seen in the last two years has never, ever happened before in California, and that is we actually have a shrinking supply.” He noted that what makes California’s hotel market dynamics unique is that in addition to a record low number of new hotels opening up, a lot of…

High Barriers To Entry Make Construction Harder To Justify Financially By Bryan Wroten | Hotel News Now | January 19, 2024 | 6:28 AM A new law in Los Angeles could have a dramatic effect on hotel development in the city — that is, if hotel developers didn’t already feel constrained by the overall environment there. In early December, Los Angeles City Council passed its Responsible Hotels Ordinance to require new hotel development projects to replace any displaced housing units on a one-for-one basis. The ordinance is aimed at prioritizing affordable housing over new hotel developments in the city. The ordinance was a compromise between the city council and Unite Here Local 11, a labor union that represents hospitality workers and that has been advocating for more affordable housing in the city. In passing the new ordinance, the council officially rescinded a March 2024 ballot initiative backed by Unite Here that would have required hotels to make vacant rooms available to the unhoused. The new ordinance also directs the city to create a voluntary registry for hotels to notify the city about vacant rooms available as interim housing. The prospect of having to replace housing that is demolished or converted for…

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…