California Hotel sales in 2016 dropped sharply throughout the region as the industry started showing signs of a plateau in real estate values and revenues.
In a year-end analysis by Atlas Hospitality Group, the Orange County brokerage reported that sales last year totaled nearly $4.4 billion, down 54 percent from the record-breaking $9.5 billion in sales in 2015.
The sheer volume of hotels that changed hands in 2015 — 389 vs. 321 last year — would be difficult to top in any year, said Atlas president Alan Reay.
“You’re coming off a phenomenal, record-breaking year, which is why the numbers are going down,” he said. “So last year is more in line with a normal level of transactions. Taking out the recessionary and peak years, California hotel sales are around 300 to 320 hotel sales a year totaling around $5 billion in transactions.”
In Southern California, 170 hotels, valued at a little more than $2 billion, were sold last year, the largest single sale being the 372-room San Diego Marriott La Jolla. It sold for $130.8 million.
The largest sale in the state, though, belonged to San Francisco, where the 336-room Ritz Carlton sold for $280 million.
Top 5 hotel sales in San Diego County
Marriott San Diego La Jolla: $130.9 million
Marriott San Diego Del Mar: $80.5 million
Marriott San Diego Mission Valley: $76 million
Crowne Plaza San Diego Mission Valley: $48.8 million
Hotel La Jolla — Curio Collection: $40 million
Like the rest of the state, San Diego County’s sales were down. The drop in dollar volume, though, was especially steep, falling 68 percent, from nearly $1.5 billion in 2015 to $473.1 million last year, Atlas reported.
The nearly $600 million sale of the Hotel del Coronado in 2015, though, accounted for a sizable percentage of that year’s transactions.
“We’ve kind of plateaued in terms of revenue growth,” said Bruce Baltin, of CBRE Hotels. “In 2016 and ‘17 we’re still growing, but at a more modest pace so there isn’t as much perception of an upside as there was in 2015. There are still a lot of people buying and selling but it’s not as frothy as it was two years ago.”
Reay is forecasting another year of declines, with california hotel sales volumes slipping between 10 percent and 20 percent.
Article by San Diego Union Tribune