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Hotel deals implode in Bay Area and California as economy turns murky

by Staff

Claremont Hotel Club & Spa, a 276-room hotel resort in the Oakland-Berkeley area.

SAN JOSE — The market for hotel purchases has nosedived in both the Bay Area and California, in a sign that investors believe the weakness in the lodging sector has yet to run its course.

Measured by dollar amount, acquisitions of hotels plunged by 48.3% in Northern California and by 60.2% in Southern California, Atlas Hospitality reported. The Northern California market includes the Bay Area.

Statewide, hotel purchase activity plummeted 56.3% in 2023 in California. This represented the second-worst decline ever documented by Atlas Hospitality Group, which tracks the lodging industry in the state.

South Tower of the Signia by Hilton hotel at 170 South Market Street in downtown San Jose.(George Avalos/Bay Area News Group)
Spartan Village at The Paseo, a former hotel tower that a real estate firm has bought and plans to convert into SJSU student housing. (George Avalos/Bay Area News Group)

These were the highest-priced hotel deals in the Bay Area in 2023, according to the Atlas Hospitality Survey:

— Claremont Hotel Club & Spa in the Oakland-Berkeley area. The 276-room hotel resort was bought for $163 million.

— Signia by Hilton South Tower in downtown San Jose. The 264-room southern tower was bought for $73.1 million. It’s being converted into housing for San Jose State University students.

— Hotel Zoe in San Francisco. The 221-room hotel was bought for $68.5 million.

The decline in sales activity is a result of hotel buyers staying on the sidelines at a time of economic uncertainty and murky prospects for the lodging sector, according to Alan Reay, president of Irvine-based Atlas Hospitality Group.

“Most investors are in a wait-and-watch situation,” Reay said.

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