San Mateo Hotel Redevelopment Timed Well with Peninsula Activity

San Mateo Hotel Redevelopment, commercial real estate, Peninsula, Founders Investment Corp, Bay Area, Hampton, Hilton Hotel, San Francisco, Los Prados Hotel,

Los Prados Hotel San MateoBy Neil Gonzales

The fast pace of residential and commercial development hitting San Mateo could include a hotel renovation at a busy intersection.

Founders Investment Corp., the owner of the aging Los Prados Hotel at 2940 S. Norfolk St., has proposed redeveloping the property into a new hotel.

“The building has lived through its useful life,” said Solomon Tsai, a partner with Founders. “We’re just tearing it down and putting up something new.”

But more than just renovating an old property, the project would build a four-story, 158-room Hampton Inn and Suites to keep up with the needs of today’s business clientele and take advantage of a booming regional economy that has fueled development in San Mateo and the rest of the Bay Area.

The existing hotel, formerly a Best Western, was built in the 1970s and has about 120 rooms spread across multiple buildings up to three stories high. The project site is in a high-traffic corner of the city off Highway 101 and East Hillsdale Boulevard with a mix of single-family dwellings, apartments, offices, a shopping center and restaurants.

Los Prados already has modern amenities such as Wi-Fi and a fitness center, but the major renovation project would build a hotel meeting 21st century demands.

“With the hotels of today, people are looking for a different product,” Tsai said. “They want security and safety and better rooms—the whole thing.”

Whereas the current building is inefficient in terms of the layout of the rooms, he said, the new hotel would be a single structure but slightly higher—by about 30 to 40 feet.

The project would also eschew exterior balcony-style corridors in favor of the current hotel trend of interior pathways—a design that improves security, he said.

Founders chose the Hampton brand, which belongs to the Hilton Hotel franchise, partly because it caters to business travelers, he said. Los Prados primarily serves that clientele, and the new hotel would continue to do so.

Hampton also is one of the top limited-service hotel brands, he said. Limited-service hotels focus on rooms-only operations without a restaurant or bar.

The project still is in the early stages and needs to be reviewed by the city Planning Commission before it can proceed to the formal application process. But if all goes accordingly, Tsai said, the project could break ground in about two years. He said he did not know at this time how much the project could cost.

“It would appear that given the offices planned or under construction there would be a need for a [new] hotel,” San Mateo Planning Chief Ron Munekawa said. “With those visiting offices, there could be an increase in demand for lodging in the area.”

The Residence Inn at 2000 Winward Way also recently proposed a project to renovate a portion of that property, Munekawa said.

These hotel proposals come at a time when San Mateo, like other Peninsula cities, is experiencing increased development activity driven by explosive job and population growth in the Bay Area.

Among the building ventures under way or planned in San Mateo are the mixed-use Bay Meadows community by San Francisco-based Wilson Meany, a 599-unit residential project with parks, offices and retail space by Palo Alto-based Essex Property Trust, and an approximately 300,000-square-foot commercial development by Houston-based Hines.

The region’s robust economy is also seeing a surging hotel industry.

According to recent data from Tennessee-based industry analyst Smith Travel Research (STR), the San Francisco-San Mateo area continued to post stellar marks in key hotel performance yardsticks.

In year-over-year measurements posted in early March, San Francisco-San Mateo boasted the highest occupancy increase among the major 25 U.S. markets, rising 9.4 percent to an 82.1 percent rate, according to STR.

San Francisco-San Mateo was also tops among the markets that had an increase in revenue per available room of more than 15 percent—recording a jump of 39.7 percent to $182.10, according to STR.

Moreover, the local area was just one of two markets showing a double-digit climb in the average daily rate paid for rooms sold, according to STR. San Francisco-San Mateo rose 27.7 percent to $221.92 followed by Orlando at 10.6 percent to $125.26.

Meanwhile, the hotel construction pipeline nationwide for February was up 17.6 percent over 2014 to about 3,600 projects in the planning or construction stages, another STR report said. Those projects amounted to nearly 436,000 rooms.

“U.S. rooms under construction continued a steady march upward,” STR Senior Vice President Bobby Bowers said in the brief report. “STR expects measured supply increases in 2015 with full-year industry growth currently forecast at just over 1 percent.”