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Dollar Volume Up, Rates Down for Hotels

SAN FRANCISCO, CA-The California Hotel Survey conducted by Atlas Hospitality Group predicts the gap between sales prices in Northern California and Southern California in 2002 will continue to narrow as room rates continue to soften.

By Joel Cone | Updated on March 19, 2002

SAN FRANCISCO, CA-Even as the dollar volume of hotel sales transactions were up in 2001 over the previous year, room rates continued to decline for all of Northern California, according to the latest report released by Atlas Hospitality Group of Costa Mesa.

“In Northern California the prices were still up slightly, but the gap is continuing to narrow between Northern and Southern California,” said Alan X. Reay, president of AHG and author of its 2001 Year-End California Hotel Sales Survey. “In 2002 I expect the gap to narrow more for two reasons: prices are continuing to climb in Southern California, and in Northern California price increases will stop and may start freefalling.”

Although the number of hotel sales fell by 13% around the state last year, the median price per room increased by 18.7% in Northern California and by 19.8% in Southern California. However, the fallout of the high tech industry combined with the number of hotel properties going into Chapter 11 bankruptcy and now in default is the primary reasons Reay believes prices are starting to come down up north. Still, the gap in sales prices based on median price per room which was 19.1% in 2000, was down to 18.1% for 2001.

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