Investors shied away from high-end hotel properties in California last year and are expected to remain cautious in an increasingly unstable economy, an industry survey shows.
Sales of hotels priced above $5 million dropped 18.5% in Southern California last year and 54% in Northern California, according to a survey released Monday by Atlas Hospitality Group, a Costa Mesa hotel broker.
At the same time, total hotel sales throughout the state dipped 2.6% to 306.
"The California hotel market in 2000 can be best described as being in conflict," said Atlas president Alan X. Reay. "On the one hand we see hotels enjoying increases in revenues . . . but on the other hand, we have very few lenders willing to make loans, especially for the larger hotel transactions."
In Orange County, for example, only one large hotel changed hands: the 255-room Ramada Conestoga in Anaheim for $12 million. The previous year, three large hotels sold: the Radisson Buena Park, the Anaheim Marriott and the Hyatt Regency Alicante in Garden Grove.
The average purchase price per room dropped 4.5% to $47,027 from $49,241 in 1999, with small coastal hotels fetching the top prices. In Laguna Beach, the 21-unit Casa Laguna Inn sold for $114,285 per room, while the 24-unit Coast Inn went for $87,083. San Clemente's eight-room Villa del Mar sold for $71,666 per room, while the Pacific View Motel in Huntington Beach commanded $60,000 per room.
While Reay expects investors to remain cautious with high-end properties for the next 12 months, he predicted that demand for smaller hotels will remain strong.
Meanwhile, the price gap between Northern California and Southern California hotels is narrowing, according to the survey. In 2000, the median price per room in Northern California was 19% higher than Southern California, compared with 21% the year before.