Survey Reports Flat Hotel Sales in State
Sales of California hotels remained flat during the first half of the year as investors passed on high-end properties to focus their attention on smaller, less prestigious hotels, according to an industry survey released Monday.
With financing scarce and hotel real investment trusts on the sidelines, the sales of hotels priced above $5 million plunged nearly 40% in the first half of the year compared to the same period last year, according to the Atlas Hospitality Group, a Costa Mesa-based hotel broker.
A total of 162 properties changed hands during first six months.
“We are getting a tremendous backlog of properties on the market [priced] above $5 million,” said president Alan X. Reay. “Buyers are being cautious because financing is very, very tough to get.”
In Orange County, hotel sales dropped 14%, to 19 from 22, with the action mostly in smaller properties. Only one large transaction closed, the 255-room Ramada Conestoga in Anaheim for $12 million. Last year, three large hotels sold: the Radisson Buena Park, the Anaheim Marriott and the Hyatt Regency Alicante in Garden Grove.
The average purchase price per room jumped 27% to $66,603 from $52,351, the highest in Southern California. The top prices per room were at small coastal establishments: San Clemente’s eight-room Villa del Mar at $325,000 per room, the 21-room Casa Laguna Inn at $114,285 and the 24-room Coast Inn at $87,083, both in Laguna Beach.
Median Price Falls by 8%
However, the median price, the point at which half the sales are higher and half lower, fell 8% to $51,064 in the county.
In Los Angeles County, the large demand for smaller, less expensive hotels boosted the number of sales by 30.56% to 47 while the median sales price per room declined 3.22% to $27,096. (The figures do not include the sale of the former Hotel Intercontinental in downtown Los Angeles, for which a sales price was not made available.)
Investors expressed a preference for older, Class “B” and “C” properties located outside prime lodging markets in Los Angeles County, Reay said.
The largest sale reported in the state during the first six months of the year was San Francisco’s nearly 1,200-room Westin St. Francis, which was sold in April to a New York investment group for $243 million.
The record for the highest price on a per-room basis went to the Four Seasons Biltmore Hotel in Santa Barbara. Beanie Babies founder Ty Warner paid $641,026 per room for the 217-room hotel.
