The Orange County Register
Hot Properties: Investors Snap Up California Hotels with Record Spending
By Jonathan Lansner
Investors are paying record amounts for California hotels with spending on pace to exceed any previous year.
Atlas Hospitality Group of Irvine reports a record $4.4 billion was spent for 174 California hotels in the first half of the year. While that’s 13 fewer hotels sold vs. 2014, this year’s six-month dollar total – up 64 percent vs. 2014 – surpasses the annual dollar volume of every year but 2006.
California investors liked larger hotels, with the median room count of properties sold rising to 60 from 47 in 2014. Meanwhile, the median price per room paid rose 25 percent to $91,000.
Key to the buying boom is the hotel industry’s record profits, which attract buyers who are using low interest rates and plentiful financing to make deals.
Orange County had similar shopping patterns. The number of first-half deals fell by three to 11 compared to a year ago. Yet dollars spent by buyers soared by 45 percent to $749 million.
Investors are paying up for bigger local hotels, too. The median sale price of an Orange County hotel was $32 million – more than triple the typical price of a year ago. Median room count was 145 vs. 61 in 2014.
Highlighting 2015’s first-half investor rush was the $360 million purchase of the 260-room Montage Laguna Beach. That was a California record valuation at $1.4 million per room.