By Meghan Hall
Within the Bay Area’s hospitality industry, an interesting trend has arisen: While the sector struggles to recover amid limited demand from consumers, the market is still seeing activity from investors keen on moving forward with property deals regardless of the circumstances. In three recently closed deals, several Silicon Valley hotels have sold for a combined $117.3 million, according to public records and sources familiar with the deals.
The larger deal, which involved two hotels, took place in San Jose. The Hyatt Place San Jose Airport, located at 82 Karina Court, sold for $47.7 million, or about $530,000 per room. In all, the hotel has 90 keys. The second hotel, called Hyatt House San Jose Airport, totals 165 rooms and is located at 2105 N. First St. in San Jose. That property sold for $41.4 million, or about $250,909 per room. The hotels were sold to Veeraganti Ranganath, who is believed to have bought out an investment partner in the deal.
In the second transaction to close was for the TownePlace Suites by Marriott in Campbell, located at 700 E. Campbell Ave. The deal closed on November 9th at $28.237 million, or about $297,231 per room, according to public records. The hotel was acquired by Walnut Creek, Calif.-based Lotus Hotels. The seller was Campbell Suites Group LLC, which is associated with Wichita, Kansas-based TMH Hotels Inc.
The deals highlight the depth of investor interest in a market that has struggled to recover fully from the COVID-19 pandemic. While sentiments about the market were fairly positive during the spring and early summer as a result of the vaccine rollout, how the market will be impacted by the Omicron variant remains to be seen.
Even prior to the newest variant, national lodging demand was not forecasted to reach pre-pandemic levels until the fourth quarter of 2023, according to CBRE Hotels Research. Recovery in occupancy was not expected to recover until the first quarter of 2024. However, with companies delaying their return to the office and potential travel restrictions looming, the impact on hotels remains unclear.
Nevertheless, hotels are continuing to trade. In November, Sunstone Hotel Investors paid $117.5 million for the Four Seasons Napa Valley. In September, AWH Partners and The Roxborough Group purchased San Francisco’s Villa Florence Hotel for $87.5 million, while the newly-developed Hilton Garden Inn sold to the same investors for $38.9 million. Combined, the sales are a clear mark of optimism in a market whose future remains uncertain.