By Cheryl Sarfaty | cheryl.sarfaty@busjrnl.com | North Bay Business Journal
PUBLISHED: February 11, 2026 at 4:03 PM PST | UPDATED: February 12, 2026 at 9:31 AM PST
Hotel sales throughout California in 2025 showed some year-over-year improvement — up 4.4% — but the North Bay was a different story. Only three of the six counties in the region reported hotel transactions, marking a steep decline from a year earlier, according to a real estate brokerage that tracks the industry.
Overall, nagging market pressures continued to create challenges, including buyers and sellers disagreeing on pricing, according to Newport Beach-based Atlas Hospitality Group.
“Deal-making stayed difficult as financing costs, operating expense pressure (labor and insurance), and seller price resistance kept transactions from normalizing,” said Alan X. Reay, president of Atlas. “California ended 2025 with 259 hotel sales totaling $4.095 billion, but the year’s totals still mask a market that remains constrained.”
Atlas reported in the first half of 2023 that sales of California hotel properties had fallen more than 53% compared to the previous year. The reason, Reay said at the time, was “almost exclusively” because of the “rapid” increase in interest rates. It was the steepest drop he had seen in nearly 15 years.
This week, the firm released its 2025 year-end survey of California hotel sales on the heels of its year-end hotel development survey, which the Business Journal reported Jan. 14. Atlas also produces mid-year surveys in both hotel categories.
Regional sales drop
There were six hotel sales in the North Bay last year, double the three hotels sold in August, but a year-over-year decline from the 23 hotels sold in 2024, according to Atlas and previous reporting.
Sonoma County had the most hotel sales the last two years. Even so, 2025 was dismal.
Atlas reported that “activity cooled sharply” in Sonoma County with the four transactions, down 67%. Dollar volume decreased 90% to $13.2 million. Median price per room edged down 8%.
The biggest sale in the North Bay was the 12-room Plaza Healdsburg Inn, which sold for $8.2 million, according to Atlas.
The second- and third-largest hotel sales in the region were in Sonoma County and Mendocino County, respectively. The 34-room Redwood Inn & Trailer Park in Santa Rosa sold for $2.625 million, and the 18-room Anchor Lodge in Fort Bragg sold for $2 million, according to the report.
Tallman Hotel in Upper Lake, with its 17 rooms, sold for $1.750 million, the fourth-highest priced in the North Bay and the only hotel sale in Lake County, according to Atlas.
The 6-room Bancroft House in the city of Sonoma sold for $1.740 million, followed by the $1.1 million transaction for the 17-room Grey Whale Inn in Fort Bragg, according to the report.
The smallest sale in the North Bay was the 13-room Union Motel in Occidental, which sold for $650,000, according to Atlas.
Unlike last year, there were no hotel sales reported in Napa, Marin and Solano counties, according to Atlas.
Statewide standouts
In Southern California, the most expensive transaction was the 340-room Embassy Suites in La Jolla, in San Diego County. That property sold for $111 million.
The second-highest sale in Southern California was the 397-room Line Hotel in Los Angeles. It sold for $68 million.
Meanwhile, in Northern California, the standout deal was the sale of the 1,919-room Hilton San Francisco Union Square in San Francisco County, which sold for $265.5 million, according to Atlas.
Other sales highlights in Northern California included the 152-room Sonesta ES Suites South San Francisco in San Mateo County, which sold for $27.5 million; the foreclosure sale of the 541-room Signia Hotel San Jose in Santa Clara County for $80 million; and the114-room Aloft Sacramento that sold for $29.1 million, according to Atlas.
In order for hotel sales to improve this year, Reay said, debt conditions must ease and cash-flow visibility has to improve, meaning industry businesses must operate and plan effectively with real-time data rather than making financial decisions based on information that isn’t current.
“(Otherwise) 2026 is likely to remain a selective, price-sensitive market with liquidity concentrated in well-positioned opportunities rather than broad-based recovery,” he said.
Cheryl Sarfaty covers tourism, hospitality, health care, aviation and employment. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.