Hotel revenues across the Golden State have skyrocketed.
In the first half of the year, hotel revenues in California fell 48.5 percent year-on-year to $1.19 billion, the San Jose Mercury News reported, citing figures from the Atlas Hospitality Group.
In Northern California, investors paid $447.5 million for hotels, 36.9 percent less than a year ago. In Southern California, they paid a total of $739.4 million, 53.7 percent less.
“The continued impact of higher interest rates as well as increases in operating costs, particularly labor and insurance costs, are depressing sales volumes and prices,” reported Newport Beach-based Atlas Hospitality Group.
An equally gloomy report in February said hotel transactions in California totaled $3.76 billion last year, compared to $8.6 billion in 2022 as investors held back.
According to the brokerage firm, which tracks the lodging market across the state, there were three major hotel deals in the Bay Area between January and June.
In Alameda County, an unnamed investor bought the 148-room La Quinta Inn in Oakland for $12 million, or $81,081 per room.
In Santa Clara County, an unnamed investor purchased the 51-room Comfort Suites San Jose Airport hotel in San Jose for $10.25 million, or $200,980 per key.
And in San Francisco, an unknown investor bought the 136-room Da Vinci Hotel San Francisco in Russian Hill for $16.5 million, or $121,324 per room.
At the same time, two of the city’s largest hotels are up for sale following loan defaults – and so far there are no interested buyers.
Last month, a judge gave the bankruptcy trustee and a lender of the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 eight more months to find a buyer.
In October, a court-appointed receiver took control of both hotels after Virginia-based Park Hotels & Resorts defaulted on a $725 million loan tied to the properties.
The Kroll Bond Rating Agency estimated the combined value of both hotels at $553.8 million last month, 65 percent less than its 2016 estimate of $1.56 billion. Industry analysts do not expect the San Francisco hotel market to recover before 2030.
— Dana Bartholomew
Read more
Judge extends deadline for sale of Hilton and Parc 55 hotels in San Francisco
Insolvency administrator takes over management of the Parc 55 and Hilton Union Square hotels in San Francisco
Hotel sales in California collapse, transaction value drops 53%
