SAN JOSE — As hotel values in 2025 rose in Southern California, a slump in Northern California showed a decline that suggests the market remains weighed down by a host of economic maladies, a new report shows.
Overall, per-room prices for hotel purchases fell in California in 2025, primarily due to weaknesses in the Bay Area market, Atlas Hospitality Group reported in its annual survey of hotel sales activity.
A drone view of the Oakland Marriott City Center in downtown Oakland, March 2024. (Jane Tyska/Bay Area News Group)
“Deal-making stayed difficult,” stated the report, which was prepared by Atlas Hospitality Group President Alan Reay.
In 2025, California hotels were bought at a median price per room of $138,409, down 7.3% from a median per-room price of $149,222 in 2024, according to Irvine-based Atlas Hospitality.
Northern California hotel deals in 2025 produced a median price per room of $109,243, Atlas Hospitality reported. That was down 14.8% from $128,181 in 2024.
Southern California hotel purchases fetched a per-room median price of $171,642 in 2025, 10.8% higher than the $154,958 price in 2024, Atlas Hospitality reported.
“Financing costs, operating expense pressure (labor and insurance), and seller price resistance kept transactions from normalizing,” Reay wrote in the report.
Loan defaults, foreclosures, and hotel property auctions due to distressed financing show that an array of ailments afflict the region’s lodging market.
“Distress broadened beyond isolated trades, with more defaults and lender-driven outcomes adding downward pressure to comparables and keeping buyers cautious,” Reay wrote in the report.
This year looks to remain gloomy, Reay said.
“2026 is still going to be tough for hotel sales,” Reay said in an interview with this news organization. “The underlying factors are still the increase in expenses, which put pressure on net operating income for hotels. Plus, interest rates have come down, but not as much as people have expected.”
An example of weakness in the market, two of the largest hotel purchases in the Bay Area during 2025 both resulted from foreclosures whereby lenders became the owners of the distressed properties in separate transactions.
In March 2025, a 276-room dual-brand hotel at 1431 Jefferson St. was taken back through a deed in lieu of foreclosure of a $112 million loan.
In May 2025, the Signia by Hilton hotel, a 541-room lodging tower in downtown San Jose, was taken back by its lender through a foreclosure that valued the hotel at $80 million, or $147,900 a room.
In July 2025, the Oakland Marriott City Center, a 500-room hotel tower in downtown Oakland, was seized by its lender in a $70.2 million foreclosure of a delinquent loan.
Brutal conditions, however, could lead to a rebound in the region.
“There is no question the Bay Area has hit its lowest point,” Reay said. “It might be coming back up.”