Check Out the Top Orange County Hotel Sales of 2017 Through June
Check Out the Top Orange County Hotel Sales of 2017 Through June
The Orange County Register
08/11/17
Check Out the Top Orange County Hotel Sales of 2017 Through June
By Hannah Madans
The hotel industry hit a record in California in the first six months of 2017, with 206 properties changing hands for roughly $3.2 billion, according to Atlas Hospitality Group.
The previous state record was 187 hotels sold in six months in 2014.
In Orange County, 16 hotels sold for $372 million, Atlas reported, a 200 percent increase compared with the same period in 2016.
Statewide, the number of hotel transactions was up 43 percent, while the total dollar value increased 67 percent. In Southern California, transactions for the period were up 23 percent.
“The profitability on hotels is still very strong,” Atlas president Alan Reay said Friday. “We’re seeing a lot of people getting into the hotel business because the returns are higher than on other commercial offerings.
“Financing from banks is readily available at historically low-interest rates and we have a lot of interest from overseas, mainly from China, in this market,” he said. “They see it as a safe investment and they like the hotel business.”
In Northern California, 109 hotels traded hands, an increase of 68 percent, for roughly $1.38 billion.
In Orange County, hotel transactions were up 14 percent increase over 2016. The median price for a room decreased 3 percent, likely the effect of hundreds of new hotel rooms hitting the market.
Some of the biggest sales in the county during the first half of the year by sales price were:
$125 million: 440-room Duke Hotel Newport Beach (formerly a Fairmont).
$57.5 million: 130-room Pacific Edge Hotel in Laguna Beach
$42.4 million: 230-room Embassy Suites in Orange
$38 million: 129-room Homewood Suites in Aliso Viejo
$37.5 million: 224-room Crowne Plaza Costa Mesa
The most expensive sale in Los Angeles was the 305‐room W Hollywood, which sold for $219 million. In the Inland Empire, it was the 115‐room Hilton Garden Inn in San Bernardino which sold for $21.5 million.
Reay said that a “tremendous amount of capital” was going in to renovating newly purchased hotels.
“In a lot of these hotels the owners have not done a lot of upgrades,” he said.
It’s also been a strong year for hotel building. During the first half of the year, the number of new hotels that opened in California increased 53 percent. There were 15 percent more hotels in development, and 6 percent more under construction vs. the same period the year prior.
“When you have a strong hotel market, you start to see more people building hotels,” Reay said. “We have a record number of hotels selling and of new hotel rooms entering the market. It’s a combination of people looking for a good investment and hotel owners that are developing hotels are looking at how expensive it is to buy a hotel and can now build a new product at the same price or even less.”
