California hotel-buying spree hits record highs – Press Telegram

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“” Bubble watch Dive into trends that may indicate future economic and / or real estate issues.

Buzz: Not only is the house eaten up at an arrogant rate. The incredible thirst for California hotels has helped break many sales records in the first six months of 2021. It’s an investor’s bet that the predicament of the tourism pandemic era is almost. finished.

sauce: Semi-annual sales monitoring report by Atlas Hospitality Group.

tendency

Let’s look at the extent of bulimia in the hotel industry …

Offers: In the first six months of 2021, 243 transactions exceeded the record set in 2017 by 42%. Sales increased 157% compared to the decline in the first half of 2020.

Dollar: The $ 5.26 billion spent on these transactions in 2021 was 23% above the previous record set in 2015. Compared to virus-cooled ones from January to June of last year, total sales jumped 4 , $ 3 billion, or 451%.

I emailed Atlas president Alan Ray about his report and just wrote “Wow”.

“’Wow’ is an understatement,” he replied.

Anatomy

Only a year ago, most California hotels were closed or scaled-down because the blockade reduced their interest in travel.

The shift from the deathbed to the boom surprised Atlas researchers. “No one could have predicted how many incredible sales and rebounds we’ve seen,” he said.

How “awesome” was the hotel market in the four counties covered by the Southern California focus groups? Watch the surge in sales trends…

Los Angeles County: Forty-eight transactions were recorded in the first half of the year, compared to 16 the previous year. These transactions totaled $ 911 million, an increase of 606% over the year. Two hotels tied for the most expensive sale – 580 Hyatt Regency LAX and 175 JW Marriott Rumelia Got Santa Monica. Both sold for $ 75 million.

Orange County: 29 transactions and 9 a year ago. Equivalent to $ 529 million, up 255%. Is it the most expensive? The 174-room Element Hotel Anaheim Resort costs $ 65 million.

Riverside County: 20 transactions and 13 a year ago. Equivalent to $ 139 million, up 81%. Is it the most expensive? The 198 Embassy Suites in Palm Desert cost $ 21 million.

San Bernardino County: 15 transactions and 10 a year ago. Equivalent to $ 83 million, up 23%. Price: 200-room residence at the Ontario Convention Center, $ 24 million.

The increase in binge eating from January to June was more pronounced in Northern California than in Southern California.

North: With 141 hotels purchased, 47 transactions in the first half of 2020 tripled. These sales amounted to $ 2.8 billion, up 578%.

South: 152 hotels were purchased, an increase of 127%. value? It rose 354% to $ 2.46 billion.

Lee told me that marketing is “a combination of the huge amount of investment capital available and investors who see California hotels as offering some of the best long-term profits.”

“I think it will affect the inflation hedge as well,” he said. “Hotels can change their rates on a daily basis, unlike retail businesses, offices and industrial buildings, which are typically set on long-term leases and have higher rent caps. “

Most notable

The 59-room Alila Ventanain & Spa in Big Sur, which can cost over $ 2,500 a night at a 160-acre resort, sold for $ 148 million. This price is worth $ 2.51 million per room. This is 22% more than the previous California record per room set by Montage Beverly Hills in 2019 for 201 rooms.

How to lather?

On a scale of zero bubble (no bubble here) to 5 bubbles (5 alarm warnings)… 3 bubbles!

Reay Rating: “We’re not perfect where we are in California home sales, but the hotel is approaching! “

He added that the hotel’s rating still seems reasonable. Even though the median per room across the state rose 13% to nearly $ 127,647.

“It’s well below the replacement cost,” he says. “Today’s new hotels in California cost over $ 200,000 per room, exclusive of grounds and furnishings, fixtures and fittings, assuming ground-level parking. If you have to go, it goes from $ 250,000 to $ 300,000 per room. “

Second quarter hotel sales data. (Courtesy of Atlas Hospitality)

Jonathan Lansner is a business columnist for Southern California NewsGroup. He can reach [email protected].. George Avalos of the Bay Area NewsGroup contributed to this report.

California hotel buying spree hits record highs – Press Telegram Source link California hotel buying spree hits record highs – Press Telegram


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