Hotel sales in the Bay Area dropped by $2 billion in the first half of the year, according to a report by consulting firm Atlas Hospitality Group, which attributed the decline to the lingering effects of the pandemic.
The total dollar volume for hotels bought in the nine-county Bay Area was nearly $661 million. That was down 66.8 percent from the $1.99 billion in hotel purchases during the first six months of 2021, the Atlas research provided to TRD showed.
The Bay Area lags behind other markets because people haven’t returned to in-person events.
“We have seen a slowdown in markets like San Francisco and San Jose due to the fact that business travel and convention/meeting business is still way down,” Alan Reay from Atlas said.
The Bay Area fared worse than the statewide hospitality sector. During the first six months of 2022, California hotel purchases generated $3.45 billion in transactions, which was down 33.6 percent from the record $5.19 billion in hotel deals in the first half of 2021, Atlas Hospitality reported.
The average price for hotel purchases in the Bay Area during the first half of 2022 was $16.9 million, which was down 39.6 percent compared with the first six months of 2021, when the average hotel purchase price was $28 million. Investors bought 41 hotels totaling a combined 3,277 rooms in the Bay Area during the first half of 2022, compared with 71 hotels that encompassed 7,787 rooms in the first half of 2021, according to the report.
In terms of price per room, the average was about $201,600 for the first half of this year. During the first half of 2021, the average price per room was $255,600.
Higher interest also contributed to the slowdown in hotel sales in the Bay Area, according to Reay. Rising rates prompt buyers and sellers to wait and see what direction the market will take.
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