SAN JOSE — Hotel development nosedived in California and the Bay Area in 2024, fresh evidence the statewide lodging market still suffers from an array of post-coronavirus economic maladies, a new report shows.
Atlas Hospitality Group disclosed in a new report that the decline affected three types of hotel projects: hotels that were being planned, hotels under construction, and new hotel openings.
Fairfield Inn & Suites, a 111-room hotel at 220 North Greenville Road in Livermore. (Google Maps)
Here are some of the details of the report from Atlas Hospitality Group:
— In 2024, developers completed and opened just three hotels in the Bay Area, a plunge of 75% from the 12 hotels that opened in the Bay Area in 2023.
— The hotels that opened in 2024 in the Bay Area had a combined total of 348 rooms. That was down 78.4% from the 1,615 hotel rooms that were opened in the nine-county region in 2023.
— Northern California, which includes the Bay Area, added 18 new hotels with 1,849 hotel rooms in 2024. The number of Northern California hotels that came on line in 2024 was down 28% from the 25 hotels that opened in the region in 2023. The total for new hotel rooms that opened in 2024 was down 38.5% from 2023.
— Southern California added 1,950 hotel rooms in 2024, which was down 19.8% from the 2,432 rooms that opened in the Southland in 2023.
— California overall added 3,798 hotel rooms in 2024, down 39.5% from the 6,280 added statewide in 2023. The state added 35 new hotels in 2024, down 34% from the 53 hotels added in 2023 in California.
“The increased cost of construction, the rise in interest rates, and many lenders pulling away from new hotel construction are continuing to apply downward pressure on new hotel development,” Atlas Hospitality Group stated in its new report.
Chicken Ranch Casino Resort, a 197-room hotel at the corner of State Route 49 and People of the Mountain Road in the Tuolumne County city of Jamestown. (Google Maps)
The largest hotel that opened in California in 2024 was the 197-room m Chicken Ranch Casino Hotel in the Tuolumne County city 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 in the East Bay last year: 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.
The hotel market in San Francisco was particularly frail, the report disclosed.
“San Francisco County still had no new hotels open in 2023 or 2024, largely due to the overall hospitality and local market conditions,” Atlas Hospitality reported.
Only one hotel was under construction during 2024 in San Francisco: a 169-room Waldorf Astoria.
In Santa Clara County, four hotels with 557 rooms were under construction in 2024. The largest was the 254-room Treehouse Hotel in Sunnyvale. A hotel is under construction in downtown San Jose, the 175-room Marriott Townplace Suites.
Economic woes might worsen for the Bay Area and California hotel markets, Atlas Hospitality warned.
“We are seeing an increase in the number of hotels that have started then stopped construction and are now in default on their loans or in bankruptcy,” Atlas Hospitality reported.
An array of financial obstacles will continue to present the hotel sector with a forbidding landscape.
“Hotel construction will remain weak as investors focus on purchasing existing hotels at discounts to replacement cost,” Atlas Hospitality stated.
