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Only a year ago at Meet the Money® 2007, based on then-current trends (and before the credit crunch), Atlas predicted that 2007 would surpass the record number of hotels sold in 2006, sales prices would appreciate in Northern California, the number of new hotels under construction would dampen 2008 volume, and the number of hotels for sale would increase sales.
What a difference a year makes! This year, Atlas reported that 2007 sales declined 12% and sales volume was down 32%, although the median price per room in the San Francisco Bay area was up 50%. The number of hotels for sale had increased by 15% by year end 2007.
There were some bright spots in 2007, including the 18% increase in the median price per room sold in California. The average price per room also rose, up 9%.
Sales will continue to be slow through 2008 and at least through mid-2009.A few other highlights from the summary of 2007 sales results:
After reaching unprecedented heights in 2005 and 2006, 2007 saw the California market level off. The state's sales volume was $3.5 billion, a 32% decrease from 2006's record-breaking $5.1 billion. Individual transactions were down 12%.
There were some bright spots in 2007, including the 18% increase in the median price per room sold in California. The average price per room also rose, up 9%.
Individual transactions in Southern California were down 19%, but the median price per room increased 17%. Northern California had a 4% drop in transactions, but a 26% increase in the median price per room.
Predictions for 2008
Atlas certainly has its hand on the pulse of California hotel transactions. Here's what they forecast for 2008:
The total number of 2008 transactions will be down by over 30% from 2007. This equates to about 250 individual sales, one of the lowest figures seen in over 10 years of reporting.
Total dollar volume of transactions in 2008 will decline by over 30% to around $2.5 billion, almost 50% below the peak in 2006.
A number of factors will continue to negatively impact sales activity, including financing difficulty; Rev PAR growth slow down or decline, disconnect between buyers and sellers on price expectations.
Sales will continue to be slow through 2008 and at least through mid-2009.
