With hospitality revenue expected to eclipse pre-pandemic levels this year, hotel sales activity in Los Angeles has regained its pace, with two deals breaching the $100 million threshold.
Investors, previously spooked by the pandemic’s effects on tourism, now exhibit a willingness to commit to major acquisitions. The most expensive deal for the year was Related Companies’ $115 million acquisition of a stake in the 220-key Godfrey Hotel in Hollywood. The transaction stands as the priciest hotel sale in Los Angeles County in the past three years.
The Godfrey Hotel sales is also just one of three deals to hit the $100 million mark over the past three years. The only other transactions to breach the threshold include Parkwest Casinos’ $102.6 million purchase of the Bicycle Hotel and Casino in Bell Gardens in April and EOS Investors’ $100 million acquisition of the Viceroy L’Ermitage in Beverly Hills in 2020.
The deals come as the West Coast’s largest hotel market posted large tourism gains. Latest figures from Calabasas brokerage Marcus & Millichap show that Los Angeles ranked fourth in the country in terms of number of hotel bookings. This was partially attributed to major sporting events such as Super Bowl LVI.
For the entirety of 2022, the revenue per available room (RevPAR) in L.A. County is projected to increase by 40.2 percent to $145.29. The figure represents a 3 percent hike compared to figures from 2019. Meanwhile, the average daily rate in the county is expected to jump by 23.8 percent to settle at a record of $201.65 per night. The figure is nearly 25 percent higher than the rate in 2019.
Here are the top five hotel sales in Los Angeles this year, according to the Real Deal’s analysis of data from brokerages Newmark and CBRE.
1. Godfrey Hotel Hollywood | Related Companies | $115 million
1400 North Cahuenga Boulevard (Godfrey Hotel Hollywood)
The biggest hotel sale in Los Angeles this year wasn’t even for an entire asset.
Related Fund Management, a Related Companies affiliate, bought an unspecified stake in the Godfrey Hotel Hollywood located at 1400 North Cahuenga Boulevard.
The seller is a joint venture between Chicago firm Oxford Capital Group and Goldman Sachs. With the deal, Goldman Sachs has exited its investment in the property, a source told The Real Deal at the time.
The property is just one of five Godfrey Hotels in the country, according to the Godfrey website. The other Godfrey-branded hotels are in Chicago, Boston, Tampa and Detroit.
2. Bicycle Hotel and Casino | Parkwest Casinos | $102.6 million
Bicycle Hotel and Casino (The Bike)
Petaluma-based Parkwest Casinos bought The Bicycle Hotel and Casino in Bell Gardens last April.
The property, which has since been renamed the Parkwest Bicycle Casino, is a gaming complex with 185 poker and card tables, a 100,000-square-foot poker room and a 99-key hotel.
The sellers are entities linked to Carter Management Group and Thousand Palms Enterprises.
Parkwest Casinos funded the acquisition with a $210 million loan.
3. Homewood Suites and Hampton Inn Long Beach Airport | MetLife | $71 million
3771 North Lakewood Boulevard (Hampton)
Insurance company Metlife bought a dual-branded Homewood Suites and Hampton Inn less than a mile from Long Beach Airport. The complex, at 3771 North Lakewood Boulevard, contains a total of 241 rooms.
The seller is Nexus Development. The firm had owned the hotel since 2016, property records show.
4. Hyatt Place El Segundo | Welcome Group | $49 million
750 North Nash Street (Hyatt)
Welcome Group bought the Hyatt Place El Segundo near LAX in September. The 143-key property located at 750 North Nash Street traded at around $342,700 per room.
The seller is Seattle-based Washington Holdings, which bought the hotel from Blackstone for $44.5 million in 2019. The firm renovated the property a year later.
Welcome Group financed the purchase with a $31.9 million loan from Commercial Bank of California.
5. Motel 6 LAX | Income Property Investments | $46 million
5101 West Century Boulevard (Motel 6)
Rancho Cucamonga-based Income Property Investments bought a Motel 6 near Los Angeles International Airport last June. The 255-key property at 5101 West Century Boulevard sits on a 2.6-acre site off the 405 Freeway. It sold for about $173,000 per room.
The seller is Blackstone affiliate G6 Hospitality, which operates the Motel 6 and Studio 6 economy hotel brands. Income Property Investments took out a $29 million mortgage from East West Bank to fund the purchase.