How Ashford Hospitality Is Cashing in on the Bay Area Hotel Market
The July acquisition of the Bardessono Hotel and Spa in Yountville is paying off for Ashford Hospitality Prime, which saw a significant boost from the property to its Q3 revenue.
The purchase of the Napa Valley hotel was just one of several in the past year in what is becoming a hot Bay Area hotel market with acquisitions and room rates on the rise. With boutique hotels all the rage (to the point that some large hotel chains are going for a boutique feel in some of their properties), the Bardessono Hotel was a strong buy for Ashford.
The REIT purchased the 62-room luxury hotel in July for $85M, noting at the time its Napa Valley location was "one of the strongest and most desirable lodging markets in the country." The property's RevPAR of $554.01, with 81.9% occupancy and an average daily rate of $676.12 at the time of the deal, is the highest in Ashford's portfolio.
In Q3, Ashford's overall rooms revenue grew $5.3M to $70.6M (up 8.2% from a year ago). Of that increase, $3.6M was a result of room revenue from the Bardessono Hotel.
Ashford reports its overall rooms expense was up $765k to $14.8M (up 5.4% from a year ago), with $622k of that related to the Bardessono Hotel.
Ashford's other Bay Area property, the San Francisco Courtyard Downtown, also had an increase in rooms revenue in Q3, up $452k from a year ago. Ashford attributed the increase to 6% higher room rates, slightly offset by a 123 basis point decrease in occupancy during the quarter. For the first nine months of this year, the 405-room hotel in the heart of SoMa saw a $2.1M increase in revenue, reflecting 5% higher room rates during that time and a 273 basis point increase in occupancy.
Big Bay Area hotel transactions this year have included CBRE Global Investors' purchase of Redwood City's Sofitel San Francisco Bay earlier this month for $154.5M; the $450M sale of Fairmont San Francisco in November; Lowes Corp's purchase of the former Mandarin Oriental San Francisco for a reported $1M/room; and Larry Ellison's purchase of Palo Alto's Epiphany Hotel for $832,500/room.
