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California hotel purchases spike as planned more rooms are planned statewide

Purchases of hotels surged in the first half of the year, especially in Northern California, a half year look by Atlas Hospitality Group shows.

The report, released Tuesday, shows 243 transactions in 2021's first six months compared to 2020, sales were up 157%. Looking only at Northern California, 141 hotels bought, triple the 47 deals in the first half of 2020. Those sales were worth $2.8 billion, up 578%.

$5.26 billion spent on those 2021 deals topped the previous record set in 2015 by 23%. Compared to virus-chilled January through June of last year, total sales dollars surged by $4.3 billion or 451%.

The boom in purchases has also helped drive demand to build hotels. Last month the Journal reported that in Sonoma, Marin, Napa and Solano counties, 83 hotels are in various planning stages, according to Atlas. That includes five projects with 537 rooms under construction in the North Bay.

Some of these projects have been permitted for several years, and experts say some may never be completed.

Atlas President Alan X. Reay told the Journal in July then there are several factors behind the spike in future hotel planning activity.

“California hotels are enjoying record profits along with record revenues,” he said. “In addition, the trend by those buying existing hotels has pushed prices up to the point where it often makes more sense to build a new one. This growth is poised to occur despite increasing construction, labor and materials costs, as well as higher tariffs on furniture made in China favored by hoteliers. With all factors considered, the cost of building a new hotel has increased 15% to 20%.”

Bay Area News Group contributed to this report.

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