H
otel development across the Bay Area and California has stalled, with a significant decline in new hotel openings. According to Atlas Hospitality Group's report, last year saw only three hotels open in the nine-county region, a 75% drop from the 12 hotels that opened in 2023. The total number of rooms added was also significantly lower, at 348 compared to 1,615 in 2023.

    The decline is attributed to increased construction costs, rising interest rates, and lenders pulling back from new hotel projects. This trend is not unique to the Bay Area, as California as a whole saw a 39.5% drop in new hotel rooms added last year, with 35 new hotels opening compared to 53 in 2023.

    In Northern California, developers opened 18 new hotels with 1,849 rooms, down from 25 hotels and 2,587 rooms in 2023. Southern California saw a more modest decline, with 1,950 hotel rooms added last year, down 19.8% from the previous year.

    The largest hotel to open in California was the 197-room Chicken Ranch Casino Resort in Jamestown, while the Bay Area's largest opening was the 127-room Hope2 Suites by Hilton in San Jose. However, San Francisco County saw no new hotels open last year due to poor market conditions.

    Four hotels with a total of 557 rooms were under construction in Santa Clara County, including the Treehouse Hotel and Marriott Townplace Suites in Downtown San Jose. Industry experts predict that hotel construction will remain weak as investors focus on purchasing existing hotels at discounted prices.