Interest in revitalizing or redeveloping closed hotel properties has been on the rise for the last decade — but it's surged to new heights since the pandemic began.
Why it matters: Vacant sites are a scourge to local property values and pose challenges, such as safety issues, to law enforcement, lawmakers and residents.
By the numbers: 458 closed hotel properties were sold in 2022, marking at least the ninth straight year of increases, according to CoStar Group.
- The number has nearly tripled in a decade, rising from 160 in 2013 and 234 in 2019, the last full year before the pandemic.
Between the lines: Shuttered hotels often still have "good bones" and thus make for excellent redevelopment opportunities, CoStar national director of hospitality analytics Jan Freitag tells Axios.
- "You have individual bedrooms, bathrooms — you often have a gym, you often have a pool, you have food and beverage setup already," Freitag says. "It slots in theoretically quite nicely into eldercare facility, student housing or multifamily."
Be smart: Many hotels closed when travel demand plummeted early in the pandemic, with some of them even restricted from accepting reservations from certain travelers.
- That increased the pool of available properties for redevelopers.
- "Some property owners decided to shut down the property because running it was more expensive than shutting it down," Freitag says.
- Former full-service hotels and traditional roadside motels are especially popular targets for redevelopment purposes, he added.
Zoom in: Several high-profile deals for shuttered hotels have taken place in recent months, including:
- The former New York Marriott East Side hotel on Lexington Avenue recently sold in a deal that could set the stage for a redevelopment into student housing, TheRealDeal reported.
- The 12-story Dayton Grand Hotel in Dayton, Ohio, closed since 2016, recently sold to new investors after being marketed for reuse as a hotel or redevelopment into multifamily housing, the Dayton Daily News reported.
- The Standard hotel on the Sunset Strip near Los Angeles — shuttered since early in the pandemic — sold for $112.5 million in what's expected to be a redevelopment for hospitality purposes, CoStar reported.
