Orange County Business Journal
High Prices, Seller’s Market for OC Hotels
By Katie Murar
California hotel sales hit record highs in 2019, with Orange County experiencing its priciest hotel sale to date.
The Monarch Beach Resort traded for a record price of $497 million, or $1.2 million per room. That per-room price trails only the 2015 sale of the Montage Laguna Beach at $1.4 million per room among reported local deals.
Through the first half of 2019, California hotel sales hit a record median price per room at $130,025, which is up 13% from the year-ago period, and up 146% over the last 10 years, according to Atlas Hospitality Group.
Will 2020 continue that momentum?
National data indicates that hotel supply is growing, as are room revenues, but at a slower clip.
“California continues to post some very impressive sales numbers. This has many experts wondering when the market will slow down,” said Alan Reay, president of Atlas Hospitality Group.
“As long as the economy remains strong and interest rates remain low, prices should continue to go up. However, if demand slows, the supply of new hotel rooms coming online could start to impact price appreciation.”
It’s a seller’s market for hotels, according to Sunstone Hotel Investors Inc. CEO John Arabia.
“We continue to struggle with the current pricing expectations” on top-end hotel buys, Arabia told analysts during a November conference call.