California Hotel Purchases Rise As Expected, More Rooms Planned Statewide
Hotel purchases surged in the first half of the year, particularly in Northern California, a biannual overview from Atlas Hospitality Group.
The report, released on Tuesday, shows that 243 transactions in the first six months of 2021 compared to 2020, sales increased 157%. Looking only at northern California, 141 hotels were purchased, triple the 47 deals in the first half of 2020. Those sales stood at $ 2.8 billion, up 578%.
$ 5.26 billion spent on these transactions in 2021 was 23% above the previous record set in 2015. Compared to viruses cooled from January to June of last year, total dollar sales jumped 4.3 billion dollars or 451%.
The buying boom has also helped stimulate demand for hotel construction. Last month, the Journal reported that in Sonoma, Marin, Napa and Solano counties, 83 hotels are in various stages of planning, according to Atlas. This includes five projects with 537 rooms under construction in North Bay.
Some of these projects have been licensed for several years, and experts say some may never be completed.
Atlas president Alan X. Reay told the Journal in July that several factors were behind the spike in future hotel planning activity.
âCalifornia hotels are posting record profits and revenues,â he said. âIn addition, the trend of buyers of existing hotels has pushed prices to such an extent that it often makes more sense to build a new one. This growth is set to occur despite rising construction, labor and material costs, as well as higher tariffs on Chinese-made furniture favored by hoteliers. Taking all factors into account, the cost of building a new hotel has increased by 15-20%.
Bay Area News Group contributed to this report.