Bay Area Hotels Avoid Lockdown, Market Recovery Seen After COVID
SUNNYVALE – Two Bay Area boutique hotels have dodged the specter of the lockdown, allowing their owners to hang on to the accommodations, a sign of hope for a hotel industry that has been battered by the coronavirus.
The Wild Palms Hotel in Sunnyvale and the Avante Hotel in Mountain View faced lockdowns at a time when the coronavirus was dealing brutal economic blows to the accommodation industry around the world.
However, in a turnaround for the two hotels, a lender rescinded a notice of default it filed in October 2020 that demanded prompt repayment of a then overdue loan of $ 37 million for the two properties.
The cancellation of the default and foreclosure attempt was formally filed with the Santa Clara County Registrar’s Office on May 21.
“The borrower made the loan current,” according to a summary published by Cantor Commercial Real Estate Lending, which in 2014 granted the loan for the two hotels. The Avante Hotel is located at 860 E. El Camino Real in Mountain View, and the Wild Palms Hotel is at 910 E. Fremont Ave. in Sunnyvale.
The decision to roll back the default and lockdown efforts appears to be a sign of hope for a Bay Area hotel industry that has been devastated by numerous business closures ordered by state and local government agencies.
Those closures began in March 2020, but on Tuesday the state government allowed California to reopen and lifted most restrictions on individuals and businesses.
“With the pandemic, you had a complete erosion of hotel values, but now those values are improving,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California hospitality industry. .
For at least an upscale hotel in one of California’s most scenic stretches, the values are jaw-dropping.
Ventana Big Sur, a 59-room resort nestled in the coastal mountains above the Pacific Ocean in Monterey County, has been bought for $ 148 million by Hyatt Hotels, the accommodation giant said on the 8th. June.
That price was $ 2.51 million per room, which Reay says is a record price for a hotel in California.
The previous record holder was the purchase in 2019 just before the Montage Beverly Hills coronavirus outbreak, of a 201-room hotel purchased for $ 415 million, or $ 2.06 million per room.
And in April 2021, the Montage Healdsburg, a 130-room hotel in Sonoma County, was purchased for $ 265 million, or $ 2.04 million per room.
“We are seeing a V-shaped recovery in hotel values,” Reay said.
At one point, experts feared a wave of foreclosures would flood the accommodation industry in the Bay Area and around the world, especially if the ongoing coronavirus restrictions helped wipe out hotel values.
But the possibility of an economic rebound appears to have allayed fears of hotel lockdowns.
“We are not seeing the hotel foreclosures that we expected,” Reay said.
An analysis released a few years ago of the two hotels that escaped lockdown showed that the Wild Palms Hotel and Hotel Avante are part of the Joie de Vivre hotel group, which is a chain of boutiques owned by Hyatt Hotels. Hyatt completed the acquisition of the Joie de Vivre group in 2019.
Hospitality industry veterans Stephen Conley and Jeffrey Eisenberg run subsidiaries that own hotel properties.
Conley is the founder and former CEO of Joie de Vivre Hospitality, which, under Conley’s leadership, has grown into the nation’s largest boutique hotel chain, according to the 2014 hotel review.
Eisenberg, owner of a portfolio of hotels in the Bay Area, is also an executive at AREA Real Estate Partners, a real estate fund.
Despite the brighter outlook for the Wild Palms and Hotel Avante, it could be two years before hotel occupancy rates and room rates in the Bay Area return to the heights they controlled. before the coronavirus epidemic.
“Even though we have a V-shaped rebound for hotel stocks, it’s not necessarily a recovery for hotel operations just yet,” Reay said.