IRVINE, CA-“We are clearly witnessing some strengthening in lodging fundamentals on the West Coast,” Bill Stadler, senior managing director for HFF, tells GlobeSt.com. As GlobeSt.com reported earlier today, Stadler recently completed his transition from the firm's Dallas office to the local one in order to concentrate on developing and growing HFF's West Coast hotel and resort investment-sales platform.
Stadler says that RevPAR growth is accelerating in top markets, but almost every West Coast lodging market is exceeding the national average of 6.8%, most notably San Francisco at 12.8% and L.A./Long Beach at 11%. “Downtown L.A. is also seeing significant growth just as a submarket. L.A. Live, what's going on Downtown and the shortage of hotel rooms there are really driving that market. It's reflective of the West Coast's strong demand.”
Growth in weekday and weekend demand patterns is showing in this part of the country despite a real recovery of group business, which tends to lower RevPAR, says Stadler. “For instance, in San Diego, a heavy group-meetings market, RevPAR growth was 7.4% below the top 25 because of that group-business impact, but the market still has a very respectable RevPAR growth.”
On the investment-sales side, there continues to be a strong appetite for West Coast hotels from both domestic investors and Asian buyers. “There are more and more Chinese investment groups looking for assets here in California. For instance, an Asian group acquired Hilton Ontario. They're very sophisticated buyers—sales are fairly disciplined in terms of pricing.”
Nothing much is happening on the full-service hospitality development side, Stadler adds. “Lodging supply is still very muted, below 1%. The development we are seeing tends to be select service, not full service, although some full-service projects are being discussed in Downtown L.A.”
He expects lodging fundamentals to continue to be strong this year, adding with cautious optimism that we should see more sales activity this year than last year.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
