Hotel Sales Slow in California

Hotel Sales Slow in California

The San Diego Union-Tribune

Hotel Sales Slow in California
By Lori Weisberg


Hotel real estate values in California continued to climb during the first half of this year, but the pace slowed considerably as fewer large, high-profile properties traded hands, a newly released report shows.

Based on the metric of median price per room, hotel sales values rose 11.3 percent statewide, although that is down considerably from the 25 percent increase during the same period last year, according to a mid-year survey from Orange County-based Atlas Hospitality Group.

In Southern California, the volume of transactions varied widely, with San Diego County seeing a 38 percent drop in the number of sales while Los Angeles and Orange counties recorded a healthy uptick. But in all three regions, the dollar amount of those transactions fell considerably — from 32 percent in L.A. to 83 percent in Orange County.

Statewide, sales during the first six months totaled more than $1.9 billion, off sharply from the $4.4 billion total during the same period last year.

That’s owing in part to a larger number of smaller hotels selling and the absence of large real estate investment trusts from the market, said Atlas president Alan Reay.

“The publicly traded companies were out of the market so the properties they’d normally buy weren’t being bought,” Reay said. “Their stock prices plummeted at the beginning of the year, so the companies traded at a price where it didn’t make sense to be buying, so what was left were a lot of smaller investors buying these 30-, 40-, 50-, 60-room hotels.”

In San Diego County, the largest of the 10 sales recorded during the first six months was the 284-room Marriott Del Mar, at $80.5 million. That compares to last year’s $259 million sale of the 400-acre Grand Del Mar resort in Carmel Valley. In all, the dollar amount of this year’s transactions plummeted 65 percent, Atlas reported.

Half of the county’s sales were hotels of under 100 rooms, although the 23-room La Jolla Inn was the priciest based on cost per room, coming in at more than $308,000 per room.

The slowing pace of price appreciation comes as development of new hotels is rapidly picking up. A recent Atlas Hospitality report documented a building boom, with more than 17,000 rooms currently under construction statewide…


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