(North County Beat) – The hotel sales market in San Diego County has experienced a significant downturn, with the number of sales dropping by 54 percent in the first half of 2024 compared to the same period last year. This decline marks the steepest fall in more than a decade.
According to a report from Orange County-based Atlas Hospitality Group, not only did individual transactions decrease, but the total dollar volume of sales plummeted by 51 percent, from $200.4 million in 2023 to $97.5 million in the first six months of 2024. This represents the fifth-largest decline since 2009.
San Diego’s market trends are reflective of the broader statewide situation, where the dollar volume of hotel sales fell by 48.5 percent, even though individual transactions dipped only slightly by 1.6 percent.
Atlas Hospitality Group, which monitors hotel sales and development across California, reported that the total dollar value of hotel sales in the state was the fourth lowest since it began tracking real estate transactions in the lodging sector.
One key observation from the report is the noticeable absence of large, high-profile properties being sold. Instead, the market has seen more activity in smaller hotels, particularly those managed by small companies or individual owner-operators.
Atlas President Alan Reay pointed out that the decline in dollar volume suggests a lack of “trophy” hotel sales in California, with a focus instead on smaller properties. Reay also noted that in cities like Los Angeles, where labor strikes and negotiations have made buyers cautious, there is a trend towards smaller hotel transactions.
Statewide, the average size of hotels sold during the first half of 2024 was 59 rooms. In San Diego County, the largest sale among the six transactions was the 149-room SpringHill Suites in Oceanside, which sold for $44 million. However, the property with the highest sales price per room was the smaller Sand Castle Inn & Suites. Despite the lack of large transactions in the first half of the year, there was a notable exception in July when the 394-room Hilton La Jolla Torrey Pines resort sold for $165 million.
Looking forward, Reay anticipates an increase in hotel transactions as buyers grow impatient with waiting for deeply discounted properties that have not materialized. “There were a lot of companies that raised money, anticipating foreclosures that didn’t happen,” Reay said. “These people are now sitting on a lot of money and are now deciding they need to get into the market and buy. And sellers are getting more realistic.”
San Diego remains one of the most desirable markets in California, which explains why there hasn’t been a significant reduction in hotel prices in the area. Unlike other regions such as San Francisco, Oakland, and downtown Los Angeles, where prices have dropped considerably, San Diego’s strong and resilient market has kept owners from feeling the pressure to reduce prices.
