The current challenging economic climate has resulted in the California hospitality market seeing some stagnation in hotel sales and development. Despite this, some properties have been placed up for sale in recent months. One property that has been put up for sale is the 40-room, 17,264 square foot hotel in San Luis Obispo. The property, located on 1.34 acres of land at 1895 Monterey St, is listed for $11.3 million, or approximately $282,500 per room.
The marketing for the Inn at San Luis Obispo is being handled by Arron Graves, a hospitality specialist with Everlygrove Hotel Brokers based in Paso Robles, Calif. The property is marketed on behalf of ownership, which is linked to local hotelier Yatin Naran, according to public records.
Originally built in 1961, the hotel underwent several renovations, the most recent one in 2016. The property consists of a pair of two-story buildings with an exterior corridor. According to the marketing materials, the hotel has a current cap rate of 4.74 percent and a net operating income of $536,132 per annum.
The Inn has 48 parking spaces available, including two disabled bays. The guest amenities include a business center, guest patio, pool/hot tub and high speed internet access. Included with the property is the 2,300 square foot vacant building that has streetside exposure, two single occupancy lavatories and a commercial sink and food preparation area.
The Inn at San Luis Obispo is located within a few blocks of downtown San Luis Obispo and less than two miles from California Polytechnic State University and the Mill Street Historic District.
It also has easy access to US Highway 101 and California State Route 1, providing the property with statewide transportation links.
As The Registry recently reported, a mid-year report from the Newport Beach-based Atlas Hospitality Group, reveals a significant decline in hotel sales in California during the first half of 2023. The report highlighted a significant drop of 53 percent in individual hotel sales across California in comparison to the same period in 2022. This decline represents a downward trend that hasn’t been observed in over a decade.
When considering the broader factors influencing hotel sales trends, the report stated that a misalignment of expectations between buyers and sellers emerges as a significant issue. Sellers are seeking prices that do not correspond with the expenses buyers now face due to rising interest rates since early 2022. This disconnect in expectations coincides with a substantial slowdown in development activity, with California having witnessed a notable decrease of over 60 percent in the opening of new hotels and rooms in the first half of the year over the past two years. The report concludes that the current outlook is for additional market challenges in the upcoming quarters as the hotel market appears shrouded in uncertainty, encompassing both sales and development aspects.
