Atlas in the news

Home Away From Home BY GINA HALL | SEPTEMBER 11, 2023 Increased construction costs and high interest rates are taking a toll on hotel construction in Los Angeles and the rest of the state.  Los Angeles County still leads California in building new lodging, with 21 hotels and 2,329 rooms under construction the first half of the year, according to a mid-year report from Irvine-based Atlas Hospitality Group.  However, the number of rooms under construction in the county is down by 42% compared to last year at the same time. The number of hotels under construction is down 28% compared to the same time last year, according to the Atlas Hospitality report.  “Smaller projects with fewer rooms are what are in the pipeline to open within the next year,” said Robert Feist, vice president of Atlas Hospitality. “It’s clearly market driven as far as financing, interest rates and cost to build.” Feist noted that pre-pandemic, the number of projects and rooms under construction were almost double the current rate during the stronger market in 2018 and into 2019, when there was more available financing and reasonable construction costs. Then Covid-19 slowed or stopped most hotel construction in 2020.  “All of those projects…

Jennifer Huffman | Sep 6, 2023 Updated 8 hrs ago The 90-room Cambria Hotel Napa Valley, which opened in 2021 after three years of construction, has been officially lost to foreclosure. The Cambria’s developer, Stratus Development of Irvine, no longer owns the Soscol Avenue property. That foreclosure also includes a Cambria hotel in Rohnert Park, in Sonoma County. Both Cambria hotels now belong to the lenders who financed the project. Listed as MRC Ca Lender V, the limited-liability corporation is an affiliate of Madison Realty Capital. A total of $80 million was owed to lenders. However, according to the company that hosted the foreclosure sale on Aug. 25, the properties were “sold” back to the lenders for a total of $59 million. However, the financial foreclosure doesn’t mean Cambria’s doors are closed to Napa Valley and wine country overnight guests. Cambria Hotel area general manager Michael Palmer, formerly the GM of the Meritage Resort and Spa in south Napa, said that the Cambria Hotel Napa Valley is open for business “and continues to operate as usual with no interruption to guest service.” Guests may confirm their reservations via their original booking method, he noted. However, “the hotel team looks forward to hosting incoming guests…

JEFF QUACKENBUSH – THE NORTH BAY BUSINESS JOURNAL August 31, 2023, 4:43PM – Updated 31 minutes ago Two Wine Country hotels with 222 rooms altogether are now under the ownership of the lender after there were no takers in recent foreclosure auctions to cover over $80 million in outstanding debt on both relatively new facilities. After multiple postponements, the 90-room Cambria Napa Valley hotel at 320 Soscol Ave. in Napa came to auction outside the Napa County courthouse on Aug. 25 with an opening bid of $40 million. The 132-room Cambria Sonoma Wine Country hotel at 5870 Labath Ave. in Rohnert Park came up for bid at $19 million earlier that day. Both went back to the lender, an affiliate of New York-based Madison Realty Capital. The private-equity firm had refinanced a construction loan on both properties in April of last year, providing $72 million to affiliates of Stratus Development Partners, the Southern California-based developer and owner at the time. The new loan went into default at the end of March this year, with an outstanding balance at that time of $1.7 million, according to public records. The first trustee’s sale dates for recovery of $80.7 million outstanding on the…

Deal at $160K per room comes as hospitality sales shrink in SoCal market AUG 29, 2023, 5:56 PM By Trevor Bach / Research by Christian Bautista In a dire season for L.A. hotel sales, one Irvine-based development firm has picked up a 148-key property near LAX.  Greens Group, an Irvine-based company led by Ashutosh Kadakia, bought the Wingate by Wyndham Los Angeles International Airport hotel for $23.7 million last month, according to property records, buying the site with two different entities. The price comes out to around $160,000 per room. The three-star Wingate by Wyndham, located in the city of Inglewood on La Cienega Boulevard, appears to have already closed; it was not immediately clear what plans Greens Group has for the property.  The deal amounts to a rare L.A. hotel sale in 2023: One recent report from Atlas Hospitality Group found that sales across California had fallen by more than 50 percent in the first half of 2023 compared to the first half of 2022, a steeper drop even than during the Great Recession.  The decline was particularly bad in Southern California, which saw only 62 hotel deals in the first half of 2023. A year earlier the figure was 151.  “We have seen…

BY BRYNN SHAFFER / AUGUST 28, 2023 This year, hotel sales experienced a steep decline statewide, according to Atlas Hospitality Group, which recently released its midyear 2023 California sales report.  “It’s a record number decline,” said Alan Reay, president of Atlas Hospitality Group, who’s been tracking California hotel sales for more than 20 years. “We’ve never seen this kind of percentage drop.” Statewide, sales decreased 53% during the first half of the year. Reay said he sees numerous similarities between now and 2009.  But, what’s even more interesting about this year’s dramatic decline in sales is that it doesn’t necessarily square with how hotels are doing, a marked contrast with 2009, when the U.S. was coming out of the Great Recession. Most hotels – specifically in Southern California – have recovered from all the residual impacts of Covid-19 in terms of an operational standpoint, with revenue and occupancy rates having generally returned to pre-pandemic levels. “The big cause of this decline is the rapid increase in interest rates,” Reay said. “The one word that would sum it up is ‘disconnect.’” Reay said the disconnect exists between the expectations of buyers and sellers – the prices that sellers are looking for are just…

by Tom York 2 days ago The price of an apartment in San Diego appears to be moderating a bit. Renters here, especially those looking for new places to live, saw continued relief as Realtor.com’s July Rental Report revealed a third consecutive month of declining year-over-year costs for studio, one- and two-bedroom properties. The drop of 1.0% from July 2022 was driven by an increased rental supply, which follows a national trend, according to the report. “The rental landscape is showing improvement, with renters in many areas spending less on rent relative to their income,” noted Danielle Hale, chief economist at Realtor.com. The surge in multi-family construction and rising vacancy rates are anticipated to further suppress rent prices, granting renters more financial stability. San Diego’s average rent was $3,045 a month in July, which meant that a typical household was paying out 39.1% of their income for shelter compared to 39.3% a year ago. However, San Diego remained among the less affordable cities, alongside coastal counterparts like Los Angeles, New York and Boston. Conversely, middle-American cities like Oklahoma City emerged as more affordable options. Average housing costs nationwide consumed 25.9% of gross household income, 14 percentages points less than in San Diego. Meanwhile, another just-released…

Hotel Performance in Hawaii; Insights from Hotel Data Conference; and More By Dana MillerHotel News Now August 23, 2023 | 5:31 AM IHG’s New Midscale Brand IHG Hotels & Resorts unveiled its newest and 19th brand, Garner, which will initially be focused in the U.S. and be positioned as a midscale conversion brand, reports Hotel News Now’s Terence Baker. CEO Elie Maalouf said during IHG’s 2023 earnings call that the new brand will be launched later in the year, and there’s already 100 hotels involved in contract negotiations. In the next 10 years, the brand is expected to have roughly 500 U.S. hotels rolled out, then increasing to 1,000 by 2043. Hawaii Wildfires’ Impact on Hotels Deadly wildfires began on Hawaii’s Maui Island on Aug. 8, killing more than 100 people and billions of dollars in damage. It’s also had a noticeable impact on hotels, reports STR analysts Isaac Collazo, Chris Klauda and William Anns. STR is CoStar’s hospitality analytics division. “For the week ending Aug. 12, occupancy declined in two Hawaiian hotel markets, according to CoStar data. Maui, where at least two hotels are included in the destruction toll, recorded a weekly occupancy of 57.1%, down 14 percentage points from the previous week….

Aug 21, 2023 By Alex Barreira – Staff Reporter, San Francisco Business Times Updated Aug 21, 2023 4:52pm PDT The rate of hotel sales across the Bay Area and around California has fallen as sharply in the first half of this year as any point since 2009. Across Northern California including all nine Bay Area counties there have been 62 hotel deals through the end of June, or 45% fewer than the 112 over the same period in 2022, according to a new report from Irvine-based hotel consultancy Atlas Hospitality. The decline statewide of 53% is the most since a 51% decline in 2009, the last year of the Great Recession. Atlas Hospitality president Alan X. Reay wrote that the hotel market is bearing out several similarities to 2009, in which there is a “huge disconnect” between hotel sellers and the buyers that would have to take on commensurate loan obligations. “We are now seeing an uptick in the notice of default filings and foreclosures, as well as borrowers simply handing the keys back to the lenders,” Reay wrote in the report. “As long as interest rates stay at their current levels there is going to be more pressure on sellers and lenders…

ByJames Forsyth – Aug 18, 2023 The Bay Area and Southern California are experiencing a significant downturn in hotel sales, as investors quickly exit the market. According to the San Jose Mercury News, the number of hotels sold in California during the first half of the year has plummeted, surpassing the lows seen during the Great Recession. Data from Atlas Hospitality Group reveals a 52.9% drop in hotel sales from January to June compared to the same period last year. These figures are even worse than the 51% decrease witnessed at the end of the recession in 2009. Alan Reay, President of Atlas Hospitality Group, expressed his concerns, stating that the industry had never experienced such a severe decline. Both Northern and Southern California have been hit hard, with Southern California experiencing the sharpest decline. Hotel sales in this region fell by 58.9%, with only 62 hotels being sold in the first half of the year compared to 151 in the same period last year. Northern California also saw a significant decline of 44.6%, with only 62 hotels sold compared to 112 in the previous year. While both regions still witnessed major hotel deals, the number of foreclosures in the…

CHERYL SARFATY THE NORTH BAY BUSINESS JOURNAL August 17, 2023, 7:09PM Sales of California hotel properties for the first half of 2023 have fallen more than 53% compared to the same time last year, according to a company that tracks hotel sales. In its newly published hotel sales survey for midyear 2023, Newport Beach-based Atlas Hospitality said the year-over-year drop is the steepest seen in the 26 years the commercial real estate firm has been in business. Further, hotel transactions priced over $5 million declined by 55% in the same time frame. “The only other year we have seen such a significant decline was in the first half of 2009, when individual (hotel) sales were down 51%,” the report stated. The reason is “almost exclusively” because of the “rapid” increase in interest rates, according to Atlas. The prices sellers are looking for don’t align with the cost buyers must pay for loans. When Atlas released its midyear hotel development report earlier this month, Alan X. Reay, president of the firm, told the Business Journal that high-interest rates have lenders feeling skittish — whether it’s for a hotel project or a hotel sale. “You have lenders now that are pulling back…

Activity during H1 2023 is biggest plunge since the Great Recession. By Jack Rogers | August 18, 2023 at 06:03 AM Sales activity for the hotel markets in California imploded in the first half of this year at a pace that seems even worse than the collapse experienced during the Great Recession of 2008 and 2009. The number of hotels sold in California dropped during H1 2023 by 52.9% compared with the first half of 2022, according to a new survey from Atlas Hospitality Group, the Irvine-based firm that has been tracking statewide lodging for more than 20 years, according to a report in SiliconValley.com. The nadir in 2009 for hotel sales in the Golden State was a plunge of 51%. “We’ve have seen nothing like this, nothing this bad,” Allan Reay, president of Atlas, told SiliconValley. The cliff dive was spread across areas of Northern and Southern California. Northern California saw an H1 plunge of nearly 45% in individual hotel sales, with 62 hotels sold in NoCal in the first half of the year compared with 112 during the first half of 2022, Atlas reported. Southern California saw a swan dive of nearly 59%–SoCal matched the total in the north of 62, but this…

Decline eclipses market of the Great Recession: “We have seen nothing like this” AUG 17, 2023, 2:15 PM By TRD Staff Hotel sales from the Bay Area to Southern California are in the lurch, with investors fleeing toward the exits. The number of hotels sold in the Bay Area and across the state plunged during the first six months of the year, exceeding the doldrums of the Great Recession, the San Jose Mercury News reported, citing Atlas Hospitality Group. The number of hotels, motels, inns and lodges sold across the Golden State from January through June fell by 52.9 percent compared with the first six months of last year. At the end of the recession in 2009, hotel sales tumbled 51 percent. “We have seen nothing like this, nothing this bad,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which has tracked the hotel industry in California for two decades. Both Northern and Southern California suffered huge declines in the number of hotels sold, with SoCal having the steepest fall. Southern California saw a 58.9 percent decline in the number of hotels sold. Some 62 hotels were sold in the first half of the year, compared to 151 in the first…