SAN JOSE — Hotel development in California and the Bay Area collapsed in 2024, fresh evidence that the nationwide lodging market remains to be reeling from a series of post-coronavirus economic woes, a brand new report shows.
Atlas Hospitality Group said in a brand new report that the decline affected three kinds of hotel projects: planned hotels, hotels under construction and latest hotel openings.
Here are some details of the Atlas Hospitality Group report:
– In 2024, developers accomplished and opened only three hotels within the Bay Area, a 75% decrease from the 12 hotels that opened within the Bay Area in 2023.
— Hotels that opened within the Bay Area in 2024 had a complete of 348 rooms. That was 78.4% fewer than the 1,615 hotel rooms that opened within the nine-county region in 2023.
– Northern California, which incorporates the Bay Area, added 18 latest hotels with 1,849 hotel rooms in 2024. The variety of Northern California hotels that got here online in 2024 fell 28% in comparison with the 25 hotels that opened within the region in 2023. The total number of recent hotel rooms opened in 2024 fell from 2023 by 38.5%.
– Southern California added 1,950 hotel rooms in 2024, a 19.8% decrease from the two,432 rooms opened within the Southland in 2023.
– California added a complete of three,798 hotel rooms in 2024, a 39.5% decrease from the 6,280 statewide in 2023. The state added 35 latest hotels in 2024, a 34% decrease from the 53 hotels, which were added in California in 2023.
“Increased construction costs, rising interest rates and the shift away from new hotel construction by many lenders continue to place downward pressure on new hotel development,” Atlas Hospitality Group said in its latest report.
The largest hotel to open in California in 2024 was the two,000-square-foot Chicken Ranch Casino Hotel within the Tuolumne County town of Jamestown.
The Bay Area's largest hotel opening in 2024 was the 127-room Hope2 Suites by Hilton at 5952 Silver Creek Valley Road in south San Jose.
Two hotels opened within the East Bay last yr: the 111-room Fairfield Inn & Suites at 220 North Greenville Road in Livermore and the 110-room TownePlace Suites at 7260 Johnson Drive in Pleasanton.
San Francisco's hotel market is especially weak, the report said.
“San Francisco County still had no new hotel openings in 2023 or 2024, largely due to overall hospitality and local market conditions,” Atlas Hospitality reported.
In 2024, there was just one hotel under construction in San Francisco: a 169-room Waldorf Astoria.
Four hotels with 557 rooms were under construction in Santa Clara County in 2024. The largest was the 254-room Treehouse Hotel in Sunnyvale. There is a hotel under construction in downtown San Jose, the 175-room Marriott Townplace Suites.
Economic problems could worsen for hotel markets within the Bay Area and California, Atlas Hospitality warned.
“We are seeing an increase in the number of hotels that started construction, then stopped, and have now defaulted on their loans or gone bankrupt,” Atlas Hospitality reported.
Various financial hurdles will proceed to pose a difficult situation for the hotel industry.
“Hotel construction will remain weak as investors focus on purchasing existing hotels at discounts to replacement cost,” Atlas Hospitality said.
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