Record Hotel Room Revenues Here, Elsewhere

The Daily Transcript
08/14/15

Record Hotel Room Revenues Here, Elsewhere
By Thor Kamban Biberman

http://www.sddt.com/News/article.cfm?SourceCode=20150814czc&_t=Record+hotel+room+revenues+here+elsewhere

The mid-year average price per hotel room increased by more than 43 percent year over year, according to an Atlas Hospitality Group report.

The average price-per-room figure climbed in San Diego by 43.25 percent from $133,791 at mid-2014 to $191,663 by mid-2015.

The average price-per-room increases in San Diego County and the rest of the state were so strong that Alan Reay, Atlas Hospitality president, says they are completely unsustainable.

“This has been a record-breaking six months. I don’t see how this could keep up next year. I can’t see how these increases in RevPAR (revenue per available room) can continue,” Reay said, adding that the low cost of capital has helped to fuel the purchases.

The combined dollar hotel sales volume in San Diego County amounted to $696.54 million through June — off just slightly from $701.08 million in the first half of last year.

While the average price of a sold hotel in San Diego County was $43.53 million, the median price was just $5.62 million — meaning that smaller hotels accounted for the bulk of the sales transactions. The median figure was $6.5 million at mid-year 2014.

Atlas also tallied the number of rooms sold during the first half of 2015 as well as the like period in 2014. The hotel consulting firm tracked 2,589 room sales by mid-year — a 25.99 percent decline from the 3,498 figure registered during the like period a year earlier.

The average number of rooms per hotel that was sold in the county during the first half of 2015 amounted to 162 — down 12.11 percent from the 184-room average recorded during the first half of last year.

The median number of rooms per hotel amounted to 188 — a figure that was 67.41 percent higher than the 112 rooms registered during the first half of last year.

The median prices per hotel room in San Diego were much closer together year over year than the average per-unit hotel prices. Atlas reported the median price per room amounted to $93,136 — up 23.84 percent from the $75,207 figure recorded at mid-year in 2014.

Atlas, utilizing data from Real Capital Analytics, reported that the 245-room Courtyard by Marriott at 530 Broadway in downtown San Diego just sold for a reported $56 million to a real estate investment trust known as Apple Hospitality REIT. The property was sold by another REIT — Hersha Hospitality Trust. The documents for the transaction had yet to appear by press time.

Apple Hospitality REIT owns at least five other properties in the county as noted by The CoStar Group. These include a 200-room Hilton Garden Inn in Rancho Bernardo, a 210-room Courtyard by Marriott in Rancho Bernardo, a 125-room Residence Inn in Oceanside, a 177-room Hampton on Pacific Highway in the North Embarcadero/Little Italy area, and a 121-room Marriott Residence Inn on Pacific Highway as well.

The largest hotel sold in the county during the first half of the year was the 419-room Hyatt Regency La Jolla at Aventine that sold for $92.73 million in late May, according to public documents. This is despite the press releases that repeatedly referred to the transaction as being $118 million.

The buyer of the Hyatt Aventine was a joint venture of JMA Ventures and Walton Street Capital.

The seller was a joint venture of Strategic Hotels & Resorts and GIC Real Estate pte Ltd., the Singapore government’s real estate investment arm. Strategic Hotels is the owner of the 757-room Hotel del Coronado.

The most expensive county sale was the more than $259 million paid for the 249‐room Fairmont Grand Del Mar above Rancho Santa Fe last April. Developer and former Union-Tribune publisher Douglas Manchester, who retains a roughly 12 percent stake in the Grand Del Mar, was the seller in that transaction. A joint venture of Blum Capital and Fairmont Hotels & Resorts acquired that property.

A 240-room Residence Inn at 356 Sixth Avenue in the East Village sold for $90 million, or about $375,000 per room, to a unit of Chatham Lodging Trust in February. The property was acquired from J Street Hospitality Inc. of San Diego.

Other hotels owned by Chatham here include a 192-room Residence Inn in Mission Valley and a 145-room Homewood Suites in Carlsbad.

The 257-room Del Mar Hilton sold for $61.4 million or $238,911 per room to a unit of Irvine-based CoreCapital in March. The seller was a unit of Wheelock Street Capital LLC. CoreCapital is also the owner of a 150-room Hyatt Place in Vista.

The 264-room Declan Suites hotel at 701 A St., which is physically attached to the building above Symphony Hall, first a Marriott Hotel and then a Sheraton, was purchased by Marriott Ownership Resorts for $50.03 million or $189,511 per room in February.

Atlas Hospitality reported statewide highlights for the first six months of the year (over the like period in 2014) included record dollar volume of more than $4.4 billion in sales, a 64 percent increase over last year.

Atlas added that the median price per room increased by 25 percent and there were 13 $100 million-plus sales though the first half of the year (including the $259 million paid for the Grand del Mar property) versus just four such transactions during the first half of 2014.

About the author