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Mogul Capital puts brakes on 400-room dual hotel in Santa Clara

Utah firm secures two-year extension on split short-term and long-term project

Mogul Capital puts breaks on nearly 400-room hotel in Santa Clara
Mogul Capital's Brad Wagstaff and 312 Brokaw Road (Mogul Capital, Getty)

Mogul Capital has pulled back on its plan to build a 396-room hotel in Santa Clara.

The Utah-based hotel developer, after citing a slow bounceback in the hotel business and local tourism since the pandemic, won a two-year extension on permits to build the six-story hotel at 1240-1290 Coleman Avenue and 312 Brokaw Road, the Silicon Valley Business Journal reported.

The hotel planned for a 1.7-acre lot south of San Jose Mineta International Airport would be split between operators for both long-term and short-term stays.

In a letter to the city’s Planning Commission that would grant the extension, Mogul CEO Brad Wagstaff blamed the pause on the pandemic and the difficulty getting project financing.

He attributed the delay in building to a slow recovery of the region’s tourism and hospitality industries.

Wagstaff said that business travel, a key driver of hotel room demand in the Bay Area, has declined due to a shift to remote work. In Santa Clara, revenue per available hotel room is 20 to 25 percent below pre-pandemic levels, he said.

“Given the recent volatility of the commercial real estate industry and specifically the hospitality market in the Bay Area, many construction lenders have become hesitant to fund projects in the area until a recovery path is more certain, making the financing process increasingly difficult,” Wagstaff said.

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In August 2021, the Santa Clara Planning Commission granted Mogul Capital a use permit to replace a restaurant building with the hotel. Its permits were set to expire in August and October this year.

At the time, Mogul was a franchisee of both Marriott International and Hilton Worldwide Holdings, and had been determining which brands would occupy the hotel.

Plans called for 206 of the hotel’s rooms to be for extended stays, and 190 rooms for short-term guests. The two parts of the hotel would have shared the same pool and services.

Despite the pause, Mogul is still committed to its hotel project, Wagstaff noted in his letter. The firm continues planning for the construction and is seeking financing in hopes that the market will turn around, he said.

“Most recent forecasts by data analysts predicted that (by the end of) 2024, the hospitality market in the Bay Area will recover to pre-pandemic levels, which should alleviate several pressures on the project,” Wagstaff wrote.

— Dana Bartholomew

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