Texas real estate investors grab San Jose hotel with hundreds of rooms
SAN JOSE — Texas-based real estate investors have scooped up a budget-friendly motel property in the South Bay, a deal that extends a private equity firm’s sales of its lodging sites.
The 204-room Motel 6 in south San Jose has been bought by investors whose primary business is ownership of hotel properties, according to documents filed on Aug. 3 with the Santa Clara County Recorder’s Office.
The hotel was bought for $29.9 million, the county records show.
Jagmohan Dhillon and Amandeep Dhillon, acting through an affiliate, bought the hotel at 2560 Fontaine Road as well as a large adjacent surface parking lot, according to the public documents.
New York City-based private equity firm Blackstone sold the property to the Dhillon-led group.
“Blackstone is attempting to sell off a lot of their Motel 6 properties,” Alan Reay, president of Irvine-based Atlas Hospitality Group, said in an interview with this news organization in early July.
Budget hotel brands have typically outperformed full-service hotels that are geared toward business travelers and convention events, which took an economic hit from coronavirus-related shutdowns and restrictions.
But it’s also possible that budget hotels that still require some levels of staffing aren’t viewed as being as profitable as other hotels that generate much more revenue with modest levels of employees to operate them.
Prior to the sale of the Motel 6 in south San Jose, Blackstone had completed sales of several Motel 6 properties in Santa Clara County:
• Motel 6 at 3208 El Camino Real in Santa Clara, 100 rooms, bought for $13.5 million on July 7. The buyer was a Texas-based group led by Jagmohan Dhillon, principal executive with DMC Hotels and Dhillon Management.
• Motel 6 at 6110 Monterey Road in Gilroy, 127 rooms, bought for $10.5 million on June 23. The buyers were Jayesh Patel and Hemaben Patel, who are based in the Canoga Park district of Los Angeles.
• Motel 6 at 2081 N. First St. in North San Jose, 76 rooms, bought for $8.5 million on June 15. The hotel is about a block away from a huge tech campus that Google leased a few years ago. The buyer was Temple Santa Nella, a group headed up by Ravi Patel that’s based in the Merced County city of Gustine.
• Motel 6 at 1240 Camden Ave. in Campbell, 19 rooms, bought for $7.8 million on May 20. The buyer was San Francisco-based Ambika Enterprises, headed up by Devendra Patel.
In 2012, Blackstone bought G6 Hospitality, which launched the Motel 6 chain in 1962 with a hotel in Santa Barbara that offered stays for $6 a night. The purchase included more than 1,000 Motel 6 and Studio 6 hotels. The Studio 6 hotels are an extended-stay brand.The transactions involving the Motel 6 properties are happening at a time when the lodging market is attempting to recuperate from an array of coronavirus-inflicted economic maladies.
“Leisure and resort markets in the Bay Area have recovered strongly and many are seeing record revenue,” Reay said in the prior interview.