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“If you build it, they will come.”
In this case, “it” is a lavish, state-of-the-art resort set against a vineyard and “they” are high-roller real estate investors.
The owner of the new Four Seasons in Napa Valley is closing in on a sale at a near-record price for a hotel. Alcion Ventures, which spent 10 years developing the property, has secured several offers exceeding $170 million for the 85-room resort.
It Ain’t Easy Being Mainstream
Strong buyer interest for Napa’s Four Seasons hotel shows the luxury resort market is alive and well, despite troubles in the broader hospitality sector.
We’re in a bit of a continental breakfast depression, in other words:
- The overall hotel industry is reeling from its worst year on record – U.S. hotel occupancy rates were 44% in 2020, down a third from the year before.
- There was a record of more than a billion unsold room vacancies in 2020, and revenue per available room fell by almost 50%. Data tracking firm STR estimates it’ll take until 2024 for revenue to recover.
In the land of high thread counts, the data points are more favorable. Two luxury properties in Napa run by Auberge Resorts reported a strong second half of 2020, as well-heeled guests from Silicon Valley sought repose after many months without travel.
And investors have taken note - earlier this month, Pebblebrook Hotel Trust sold the 416-room Sir Francis Drake Hotel in San Francisco, netting $158 million in proceeds.
That’s One Expensive Key
Napa’s Four Seasons, located in Calistoga, is set to open for business in the second quarter. Current bids for the property, including one from California-based Sunstone Hotel Investors, value the resort at over $2 million per key.
The 411 on PPK: Hotels are commonly valued at a price-per-key rate, which helps size-up properties of varying sizes and room counts.
Get Guinness Records on the phone - only two hotels in the U.S. have ever sold for more than $2 million a key: Hawaii’s Four Seasons Resort Hualalai and the Montage Hotel Beverly Hills.
The Takeaway: Will they accept Hilton Honors Points? Please?