New records were set in hotel transactions across California in 2014, but hotel sales within Southern California had mixed results, according to a recent hospitality industry report.
Alan Reay, president of Irvine-based Atlas Hospital Group, said the company’s California hotel sales survey showed a record 398 hotels sold in California and the price paid for those properties, nearly $ 5.1 billion, represented a high sales volume for the state.
âIf we look at history, it’s 2006 right now,â Reay said.
For the interior of Southern California, however, hotel sales transactions in 2014 significantly zigzagged.
Transaction volume in the interior region fell to $ 177.3 million from $ 406.8 million in 2013 when the luxury Ritz Carlton Rancho Mirage resort opened in Riverside County. âIt’s the ebb and flow of the hospitality industry,â Reay said, explaining that a big sale can have a major impact on total sales.
Expect Inland numbers to rebound in 2015, Reay said – for two reasons:
Hotels along the coast are once again selling for prices exceeding $ 1 million per room, a dynamic that puts pressure on domestic prices.
There are plenty of hotel projects in the books.
Hiral Patel, president of Stagemont Hotels, is leading a $ 10.5 million construction project to open a Holiday Inn Express & Suites along Interstate-10 in Loma Linda in July 2015.
The 85-room property, the fifth hotel in Stagemont’s portfolio, would be the second I-10 property to be built by the family business since the Great Recession.
âOur goal has always been to build and develop more hotels in the Inland Empire,â Patel said, but recession hit shortly after the Hampton Inn & Suites opened in Banning. âThe downturn has put an end to a lot of development plans for a lot of people,â he said.
Now that the economy has stabilized and started to recover, Patel said the appetite for hotel construction by Stagemont Hotels and other key players in the hospitality industry is growing.
âWe are building, and very confident. We expect five or six years of slow but steady growth, âPatel said.
Bruce Baltin, senior vice president and hospitality industry analyst at PKF Consulting in Los Angeles, said the interior region has emerged more slowly from the crisis. âIt’s coming back to healthy occupancy levels and we’re seeing room rates go up to create a new supply. “
âWe expect to see more online in 2016, 2017 and beyond,â Baltin said.
Hotel properties under construction or planned, according to Reay, include Residence Inn, Courtyard by Marriott, Holiday Inn, Hampton Inn & Suites, all in Murrieta; Comfort Suites, Temecula; La Quinta Inn, Norco; Palomar Palm Springs Hotel, Palm Springs; El Paseo Hotel, Palm Desert; and SilverRock Resort Hotel, La Quinta.
âThe Inland Empire, due to the availability of land, will see a lot of products added,â Reay said.
Here are the county-by-county highlights from the Atlas Hospitality Group report:
Transactions: Hotel sales fell to 18 from 26 in 2013.
Sales volume: $ 102.5 million, down 70% from $ 343.6 million.
Median price paid per room: $ 82,010, up 15.5%.
Biggest and most expensive sale: Miramonte Resort & Spa, Indian Wells. Rockpoint Group of San Francisco paid $ 26.2 million for the 215-room property.
Highest price per room: Horizon Hotel Palm Springs, a 24-room boutique, sold for $ 4.3 million, or $ 179,167 per room.
COUNTY OF SAN BERNARDINO
Transactions: Hotel sales increased from 20 to 30 in 2013.
Sales volume: $ 74.8 million, up 18% from $ 63.2 million a year earlier.
Median price paid per room: $ 51,905, up 37%.
Biggest sale: Hilton San Bernardino, a 248-room property in San Bernardino, sold for $ 10 million.
Most expensive sale: Holiday Inn Express, a 120-room Ontario property sold for $ 14 million.
Highest price per room: SpringHill Suites by Marriott, owned by Hesperia, attracting investors who have paid $ 117,000 for each of its 63 suites.
Transactions: Hotel sales increased from 14 to 30 in 2013.
Sales volume: $ 815.5 million, up 520% ââfrom $ 131.4 million.
Median price paid per room: $ 120,305, up 24%.
Biggest and most expensive sale: St. Regis Monarch Beach Resort, a 400-room resort in Dana Point, sold for $ 316.9 million or $ 792,000 per room.
SAN DIEGO COUNTY
Transactions: Hotel sales fell slightly to 30 from 31 in 2013.
Sales volume: $ 798.8 million, a gain of 1.7% over 2013.
Median price paid per room: $ 75,901, down 24%.
Biggest sale: Town & Country Hotel, a 956-room property in San Diego.
Most expensive sale: Hotel del Coronado, partial interest purchase of a 757-room resort by owners with a controlling interest in the historic beachfront resort for $ 512.1 million or $ 676,000 per room.
LOS ANGELES COUNTY
Transactions: Hotel sales rose to 66 from 56 in 2013.
Sales volume: $ 1.1 billion, up 34%.
Median price paid per room: $ 83,845, up 22%.
Biggest sale: Los Angeles Airport Marriott, a 1,004-room property, sold for $ 160 million.
Most expensive sale: Hotel Palomar Los Angeles-Westwood, pulling in $ 294,000 for each of its 264 rooms and suites.
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