Hotel openings slump in California, although Bay Area holds steady

California hotel sector wobbles with post-coronavirus hangover

https://www.mercurynews.com/2022/07/14/hotel-construct-develop-slump-slowdown-bay-area-california-covid-tech/

M Social, a 263-room hotel in Sunnyvale, concept.
M Social, a 263-room hotel in Sunnyvale, concept. (Millennium Hotels and Resorts)

By GEORGE AVALOSGEORGE AVALOS | gavalos@bayareanewsgroup.com
Bay Area News Group
PUBLISHED: July 14, 2022 at 10:13 a.m. | UPDATED: July 14, 2022 at 3:48 p.m.

SAN JOSE — The hotel industry in California, struggling to recuperate from coronavirus-linked economic maladies, has staggered into a brutal slowdown — although the Bay Area market remains steady — a new report shows.

An estimated 29 hotels opened in California during the first half of 2022, down 43% from the 51 hotels that opened statewide over the first six months of 2021, according to a report from Irvine-based Atlas Hospitality Group, which tracks the lodging sector.

In Northern California, 21 hotels opened in the first half of 2022, which was down 34.4% from the number of hotels that opened in the first six months of 2021. The newly opened Northern California hotels accounted for 2,828 rooms, down 29.4% from the 4,007 new rooms opened in the first half of 2021, according to Atlas Hospitality’s reports for the two time periods.

Bay Area lodging operators opened 12 hotels in the first half of 2022, slightly fewer than the 14 hotels that opened in the first half of 2021.

Hilton Garden Inn, a 150-room hotel at 101 E. Gish Road in San Jose, concept. (Westlake Urban)
Hilton Garden Inn, a 150-room hotel at 101 E. Gish Road in San Jose, concept. (Westlake Urban)

The hotels that opened in the Bay Area during the first half of 2022 represented 1,897 rooms, which was up 17.4% from the 1,616 rooms that were opened in the first half of 2021.

In Southern California, eight hotels opened during the first six months of 2022, down 57.9% from the 19 hotels that opened in the Southland in the first half of 2022. Southern California hotels opened lodgings with a combined 733 rooms, down 76.8% from the 3,161 rooms opened in that region in the first half of 2021, Atlas Hospitality reported.

“The high cost of construction combined with rising interest rates has had a dampening effect on new hotel construction projects,” Alan Reay, president of Atlas Hospitality, stated in the company’s mid-year hotel development report.

In Santa Clara County, seven hotels with 1,155 rooms opened during the first half of the year, making the South Bay the most active county for hotel openings in California so far in 2022, this news organization’s analysis of the Atlas Hospitality report shows.

During the first six months of this year, the largest hotel that opened in Santa Clara County was the 194-room Element Milpitas hotel in Milpitas.

OAKLAND, CALIFORNIA - MARCH 09: The lobby of the Kissel Uptown Oakland hotel is seen in Oakland, Calif., on Wednesday, March 9, 2022. The 168-room hotel, a part of the Unbound Collection by Hyatt, opened on Feb. 24. (Jane Tyska/Bay Area News Group)
Lobby of the Kissel Uptown Oakland, a 168-room hotel in downtown Oakland. (Jane Tyska/Bay Area News Group)

The largest hotel that opened in the Bay Area and all of California in the first half of 2022 was the 299-room Luma Hotel at Mission Bay in San Francisco.

The East Bay’s largest and only hotel that opened in the first half of 2022 was the 168-room Kissel Uptown Oakland.

So far this year, the only hotel to open in San Mateo County was the 128-room Fairfield Inn & Suites in South San Francisco.

The only hotel to open in the North Bay this year was the 135-room Stanly Ranch Resort Napa in the city of Napa.

At present, 116 hotels are under construction in California that total nearly 16,000 rooms. Of these, 49 hotels with 6,100 rooms are under construction in Northern California, while 67 hotels with 9,900 rooms are under construction in Southern California.

Developers are planning to build 1,248 hotels that — if constructed and completed — would produce a combined 162,800 rooms in California.

In Northern California, developers are currently proposing the construction of 564 hotels with a combined 70,500 rooms. In Southern California, developers are eyeing 685 hotels that would produce 92,300 rooms, according to the Atlas Hospitality report.

Most of the hotels that have been proposed statewide won’t be built any time soon due to ongoing economic uncertainties regarding the leisure and hospitality sector in the wake of the coronavirus outbreak, in Reay’s view.

“We predict that the vast majority of hotels in planning will be put on an indefinite hold,” Reay said.

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