The Registry February 10, 20262

Los Angeles provided pockets of strength while Orange County and inland markets reflected tighter pricing discipline

Southern California’s hotel investment market in 2025 moved in a more restrained direction, with fewer large trades and a narrower pool of active buyers. While select assets continued to transact — particularly those priced to reflect higher debt costs — overall volume declined as many owners remained unwilling to meet buyer expectations. The result was a year marked by selective deal flow rather than broad participation, as reported by the Atlas Hospitality Group.

Across the region, 117 hotels sold during the year, down slightly from 2024, while total dollar volume fell more than 20 percent to approximately $1.73 billion. Unlike Northern California, Southern California did not benefit from a comparable concentration of large distressed trades, leaving overall activity more sensitive to financing constraints and operating cost pressures.

In the report, Atlas Hospitality Group pointed out that Los Angeles County stood out as the region’s most active market. A total of 41 hotels traded in 2025, up from 36 the prior year, while dollar volume rose more than 50 percent to roughly $736 million. The largest transaction was the lender-initiated sale of the 397-room Line Hotel Los Angeles for $68 million, which anchored pricing expectations for urban, full-service assets. Median price per room increased to approximately $185,000, reflecting a mix of repositioning plays and discounted larger properties.

San Diego County presented a different profile. Transaction count declined to 17 sales, and total volume dropped to about $469 million. However, median price per room climbed sharply to roughly $248,000, supported in large part by the $111 million sale of the 340-room Embassy Suites La Jolla. That transaction, which closed at roughly half of its 2021 valuation, reinforced the report’s observation that “price discovery via steep discounts” extended beyond San Francisco into Southern California’s coastal markets.

Orange County remained notably subdued. Deal count held steady at 14 transactions, but total dollar volume collapsed to approximately $137 million as the market saw fewer institutional-scale trades. Median pricing fell to around $140,000 per room, a sharp decline from the prior year, underscoring buyer resistance to peak-cycle pricing in a market with higher operating and insurance costs.

Inland counties reflected even tighter conditions. Riverside County recorded 10 sales, half of 2024 levels, with volume falling to roughly $62 million. Despite the slowdown, median price per room increased to about $152,000, aided by the sale of the 156-room Indian Wells Resort for $19.4 million. San Bernardino County posted 21 transactions, up year over year, but total volume declined to $100 million as activity skewed toward smaller, lower-priced assets. The largest deal in the county was the sale of the 128-room Hyatt Place Ontario for $17.35 million.

Across Southern California, median pricing settled at approximately $172,000 per room, up modestly from 2024 but masking significant divergence between coastal and inland markets. Buyers remained focused on assets that could clear at a conservative basis, while properties requiring aggressive underwriting largely failed to transact. The report notes that deal-making remained challenging due to “financing costs, operating expense pressure (labor and insurance), and seller price resistance,” factors that were particularly evident across Southern California’s middle-market inventory. Without the volume boost provided by multiple large distressed trades, overall activity lagged Northern California despite continued interest in select assets.

Overall, Southern California’s hotel market appears positioned for gradual, uneven improvement rather than a rapid rebound. Pricing discipline remains firmly in place, and capital is likely to stay concentrated in assets offering either clear operational upside or a sufficiently discounted entry point. Until debt conditions ease, transaction volume is expected to remain selective, with recovery unfolding market by market rather than across the region as a whole.