Downtown San Jose hotel sells for a 30% loss

Southern California hospitality company Khanna Enterprises acquired the Westin San Jose hotel for about $45 million, about 30 percent less than what the property sold for in 2017.

The 171-room downtown hotel sold for about $263,000 a room, the Mercury News reported. The seller was Aju Hotels and Resorts, and the deal was recorded at the Santa Clara County Clerk-Recorder’s Office on Jan. 20. The six-story building at 302 S. Market Street is across the street from the San Jose McEnery Convention Center and has long been popular with convention-goers, the Silicon Valley Business Journal said. It’s also kitty-corner to Plaza de Cesar Chavez and less than a block from the San Jose Marriott.

The sale underscores the extent that the pandemic has hit hotel values in San Jose and Silicon Valley, particularly those that depend on business travel and conventions. South Korea’s Aju bought the Westin for $64 million in June 2017, meaning the property lost about 30 percent of its value in less than five years.

Hotels in California’s coastal regions such as Monterey and San Diego counties and in the state’s “wine country,” meantime, have sold for record price-per-room numbers during the pandemic. Those so-called destination markets are seeing “incredible” values, Alan Reay of Atlas Hospitality Group, which wasn’t involved in the Westin sale, told the Mercury News.

Irvine-based Khanna also owns Four Points by Sheraton at 211 S. First Street, a block from the Westin. The city approved a 24-story cantilevered addition to the Sheraton about two years ago that would more than quadruple its number of rooms to 360 from 86. Khanna hasn’t started that project.

[The Mercury News] — Matthew Niksa

• Four Seasons Napa Valley sells in second-priciest lodging deal
• Hotel sales in California “completely rebound” from 2020 levels
• Bay Area hotel decline is largest in the nation