25 California Buildings News • Q3 2021
California Hotel Market Booms Hotel Sales Soar As Leisure Market Returns
Individual hotel sales in California are up over 157%, which is a new record high, according to Irvine-based Atlas Hospitality Group’s 2021 midyear report. “California hotel sales have completely rebounded from the COVID-19 impacted results that we saw through the first six months of 2020. The total dollar volume at over $5.2 billion is also a new record, up 450%. Median price per room is up by 13% and the sale of the Alila Ventana Inn & Spa in Big Sur at $2,508,475 per room set a new record for the highest price per room ever paid in California. As you can see from the graphs and charts in this report, the sales results for the first six months of 2021 have exceeded all expectations. “Our 2020 mid-year California hotel sales survey saw the steepest decline in hotel sales on record due to COVID. The results from this year’s survey have seen an amazing rebound in sales and values, setting a number of new records:
w Highest number of individual sales, surpassing the previous record set in 2017 by 41.7%. w Highest dollar volume of transactions, surpassing the previous record set in 2015 by 22.5%. w Highest price per room ever paid in California at $2,508,475 for the 59-room Alila Ventana Inn & Spa in Big Sur, surpassing the previous record set in 2019 for the 201-room Montage Beverly Hills by 21.7%. “No one could have predicted the kind of sales number and incredible rebound that we have seen in the California hotel market. All of the new records that have been set so far in 2021 highlight the huge buyer demand for California hotels and is a resounding endorsement of the State’s longterm investment potential. This truly is The Golden State.” What’s Driving Sales Bob Eaton, founder of Roberts Hospitality, says, “Hotel Investment differs from the hotel business. Capital for investment in new hotels or hotel
acquisitions react to the hotel business trends and performance. “Two things happened, first there was tremendous capital amassed during and immediately after the 2015 financial market collapse. The hotel market was showing strong signs of withstanding the financial crisis, and as an asset class it was seen as golden. This capital was aggressively pursuing ground-up development and existing properties. By 2019, that capital was not all spent largely because of the lack of properties available to sell. Owners were riding a nice wave. “Secondly, when COVID hit, distress came quickly to hotels and more capital was amassed hoping to get some bargains in the expected downturn and owners realized how vulnerable they could be as occupancy dropped dramatically in 2020. As we got to the vaccination phase, we learned that certain markets with strong leisure travel components actually fared rather well and when the capital started buying, the owners were happy to oblige.”
