A 97-room extended stay hotel in the Greater Palm Springs area has recently been placed on the market. Formerly a Red Lion Hotel, the listing by Marquee Commercial Lodging Advisors shows that the property, now called Desert Extended Stay Hotel, is being offered at $11 million or about $113,402 per room.
The three-story hotel is located at 69151 E Palm Canyon Drive in Cathedral City. The property was initially built in 1985 before being purchased by Red Lion Hotels in 2017, which maintains ownership of the property despite changing its name.
After purchasing the property, the company added 81 kitchenettes in order to offer an extended stay option. According to the listing, with the extended stay rooms, the property is approximately 92 percent occupied on average and offers a net operating income of $532,801.
“Ownership is based out of state and the property is absentee owned. This presents an opportunity for a more hands-on owner/operator to better control costs and effectively manage the property.” the listing states.
As well as offering extended stay options, the surrounding location could also serve tourists. Situated just outside of Palm Springs near Rancho Mirage and the Coachella Valley, the property is near various popular resorts and attractions. The hotel is also just a short drive to nearby Joshua Tree National Park and maintains easy access to Interstate 10.
According to a recent year-end hotel investment survey by Atlas Real Estate Group, extended stay hotels have been a favored property type among California hotel investors and developers alike due to their high profit margins and low labor costs. Hotels in general continue to perform well, with the report showing a new record high of individual hotel sales at 510, approximately 71 percent more than the amount of hotel properties purchased in 2020. Dollar volume for hotel properties across the state also shot up 204 percent year-over-year to $9.93 billion.
Marquee Commercial Lodging Advisors did not respond to a request for comment.
