SAN JOSE — California’s hospitality industry, which is struggling to recover from coronavirus-related economic illnesses, has seen a sharp downturn — though the Bay Area market remains stable — according to a new report.
An estimated 29 hotels opened in California in the first half of 2022, down 43% from the 51 hotels that opened statewide in the first six months of 2021, according to a report by Atlas Hospitality. Group, based in Irvine, which tracks the hospitality industry.
In Northern California, 21 hotels opened in the first half of 2022, down 34.4% from the number of hotels opened in the first six months of 2021. Newly opened hotels in Northern California accounted for 2,828 rooms, down 29.4% from the 4,007 new rooms opened in the first half of 2021, according to Atlas Hospitality reports for both periods.
Bay Area lodging operators opened 12 hotels in the first half of 2022, slightly less than the 14 hotels that opened in the first half of 2021.
Hotels that opened in the Bay Area in the first half of 2022 accounted for 1,897 rooms, a 17.4% increase from the 1,616 rooms opened in the first half of 2021.
In Southern California, eight hotels opened in the first six months of 2022, down 57.9% from the 19 hotels that opened in Southland in the first half of 2022. Southern California hotels opened accommodations with a total of 733 rooms, down 76.8% from the 3,161 rooms opened in this region in the first half of 2021, Atlas Hospitality reported.
“The high cost of construction combined with rising interest rates has had a dampening effect on new hotel construction projects,” said Alan Reay, president of Atlas Hospitality, in the hotel development report of mid-year of the company.
In Santa Clara County, seven hotels with 1,155 rooms opened in the first half of the year, making South Bay the most active county for hotel openings in California so far in 2022, according to analysis of the Atlas Hospitality report by this press agency.
In the first six months of this year, the largest hotel open in Santa Clara County was the 194-room Element Milpitas Hotel in Milpitas.
The largest hotel to open in the Bay Area and all of California in the first half of 2022 was the 299-room Luma Hotel in San Francisco’s Mission Bay.
The largest and only East Bay hotel to open in the first half of 2022 was the 168-room Kissel Uptown Oakland.
So far this year, the only hotel to open in San Mateo County was the 128-room Fairfield Inn & Suites in South San Francisco.
The only hotel to open in North Bay this year was the 135-room Stanly Ranch Resort Napa in the city of Napa.
Currently, 116 hotels are under construction in California totaling nearly 16,000 rooms. Of these, 49 hotels with 6,100 rooms are under construction in Northern California, while 67 hotels with 9,900 rooms are under construction in Southern California.
The developers plan to build 1,248 hotels which, if built and completed, would produce a combined 162,800 rooms in California.
In Northern California, developers are currently proposing the construction of 564 hotels with a total of 70,500 rooms. In Southern California, developers envision 685 hotels that would produce 92,300 rooms, according to the Atlas Hospitality report.
Most of the hotels that have been proposed statewide won’t be built anytime soon due to continued economic uncertainties surrounding the leisure and hospitality sector in the wake of the coronavirus outbreak, according to Reay.
“We anticipate that the vast majority of hotels currently being planned will be suspended indefinitely,” Reay said.
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