Debt stress boosts California hotel transaction volume in 2025
Refinancing costs, cash flow problems mean owners have fewer options
At $175.8 million, the sale of the Residence Inn by Marriott Berkeley was one of the highest-priced hotel deals in California in 2025. (CoStar)
https://www.costar.com/article/306420752/debt-stress-boosts-california-hotel-transaction-volume-in-2025?
By Bryan Wroten
The hotel deals pace picked up in California during the second half of 2025, driven in large part by distressed sales.
The California Hotel Sales Survey 2025 Year End from Atlas Hospitality Group reported 259 individual hotel sales, a 4.4% year-over-year increase. Total dollar volume amounted to nearly $4.1 billion, a 22% year-over-year increase, but the median price per room fell by 7.2% to $138,000. The company’s mid-year survey reported a 7.4% year-over-year drop in individual sales.
Distress was a significant factor in the increased number of deals this year, Atlas President Alan Reay said. For example, the Parc 55 and Hilton Union Square hotels in San Francisco sold at a deep discount to their prior valuations. Many lenders were likely trying to get some of the stressed properties off their balance sheets before the end of the year, leading to higher transaction and dollar volumes.
Along with the San Francisco properties, there are motivated sellers, such as Ashford Hospitality Trust and other publicly traded hotel real estate investment trusts, that were able to sell at “market pricing,” he said. The state may actually have a record number of hotels available for sale.
“The issue there is, you have quite a lot of motivated sellers, they're restricted as to how far they can go down on that price due to the fact that they have the loans that they have on there,” he said.
There are multiple factors at play pushing owners to sell, Reay said. Net operating income is essentially down across the board while expenses are up. Those low-interest-rate loans that owners enjoyed years ago are coming due, and the cost of debt service now is roughly double what they secured before.
Even though the Federal Reserve has lowered interest rates, the cost of debt for hotel owners was below 4% before rising to about 8%, and it has since settled in the low 6% range, he said. Added to that is the fact that appraised values are now lower than they were two to three years ago.
“So, in many cases you have a loan coming due, you have to actually come out of pocket to pay down the financing to refinance,” he said.
There’s a definite uptick in the number of notices of default filed on hotels, Reay said. Most banks delayed as much as they could, but they could only hold back so long. For the first half of 2026, he said he expects to see more lender-related sales, and that will affect the median price per room.
Many of these defaults come from independent hotels and those in the lower end of the chain scale, he said. Many of those loans originated with the U.S. Small Business Administration, which allowed some borrowers to take out debt with as little as 10% for a down payment. With the labor cost associated with running a smaller hotel that charges less per night than a higher-end hotel, that makes it difficult for these hotels to operate confidently.
From a buyer’s perspective, the transaction volume this year compared to last year is a reflection of at what price point sellers were willing to sell, Reay said.
“I think it’s now less an issue with interest rates and financing as more to we’re now seeing in some markets sort of a reset in terms of the pricing,” he said.
California’s hotel-to-housing funding program, Homekey, remains active but less so than in recent years, he said. The private-sector buyers, however, continue to show interest in buying hotels to convert to affordable housing. There are still rooms in this sector to be converted as owners of these hotel types continue to be under pressure from expenses.
The biggest expense for hotels is labor, but if an owner can convert a hotel to apartments, they move from all the operating costs associated with running a hotel to almost nothing, he said. There’s no housekeeping service, no credit card commissions and no online travel agency or franchise fees. There’s perhaps an on-site manager and maybe a part-time maintenance employee.
Given the cost of available land and construction for a new apartment, converting hotels looks much more palatable, he said. A hotel that costs $100,000 per key to buy with a conversion cost of $30,000 to $50,000 per unit is well below the cost of paying $400,000 per unit to build.
Could America’s Most Enduring Cold Case Finally Be Solved?
BB DESIGN STOCK/Shutterstock
https://www.fodors.com/world/north-america/usa/north-carolina/experiences/news/could-the-lost-colony-of-roanoke-finally-be-solved
The lost colony of Roanoke remains a mystery that researchers are hoping DNA tracing can solve.
The Outer Banks (or OBX) is a stunning stretch of seaside villages off North Carolina’s coast. The 200-mile string of barrier islands is a vacation hotspot, known for its windswept dunes, wild horses, wetlands, and shipwrecks. It’s also the home of America’s most enduring mystery: the unexplained disappearance of 117 hopeful European settlers in Roanoke.
In July 1587, even before the Mayflower made landfall, a tiny fleet of three English ships sailed across the Atlantic and landed on the OBX shores. Powerful statesman Sir Walter Raleigh had dreamed of founding the first permanent colony in America. He promised John White, an experienced artist and cartographer, the governorship in exchange for a successful expedition. White and a team of middle-class men, women, and children boarded a boat the size of a school bus and voyaged overseas.
They arrived victoriously, and Roanoke Island became the cradle of the New World. Within weeks, the first English child was born on American soil. The explorers created maps and made essential observations about the Native people and local geography that remain historically significant today. But ultimately, their success was limited.
The colonialists endured many hardships; some self-imposed and some circumstantial. They didn’t bring enough resources, such as blankets or gunpowder, and most were professional craftsmen, lacking the agricultural skills needed to grow crops on foreign land. It was also too late in the season to yield a large harvest, and coincidentally, a drought period. The entire region faced severe food scarcity. With no one having goods to trade, an already strained relationship with the Algonquian people quickly reached a mutually violent breaking point. White had to do something.
After just six weeks in America, White sailed back to Europe to gather additional supplies. His country was now at war with Spain, and Queen Elizabeth required all English ships to stay at port for military defense. One sailing attempt in 1588 resulted in a raid by French pirates, and the weather prevented another. It was three years before White finally set foot on Roanoke again, and the return was shocking.
The colony had completely vanished in his absence. Almost all evidence of a once busy settlement, including his own family, had disappeared. The only helpful clues White discovered were the words “CROATOAN,” the name of a local tribe, left carved into a fence post, and the associated letters “CRO” etched into a tree. There were a few weathered remnants of looted personal belongings left behind, but no apparent signs of a struggle. Even more peculiar was that their dwellings seemed purposefully dismantled, and no human remains were ever found on the island.
Theories Swirl Around America’s Most Historic Cold Case
The missing people of Roanoke remains the oldest and possibly most bizarre cold case in American history. There are reasons to debunk every theory explaining the mass disappearance, but over centuries, a few have stood out, ranging from the supernatural to the sensible. Early on, some speculated there was a mass demonic possession, an uprising and massacre, or that starvation caused widespread cannibalism. Others assumed that famine, disease, and natural disasters—such as hurricanes—completely wiped out the population. The most convincing hypotheses, though, was that the settlers likely migrated west or assimilated locally.
It’s possible some settlers relocated inland, but the majority of experts believe that most of the colonialists remained in the Outer Banks and were able to do so because the Native Americans rescued them. Nearby Hatteras Island was inhabited by the friendly Croatoan tribe, which was led by a man named Manteo, who was an established ally to the English. Archaeologists have discovered evidence of the first settlers on Hatteras, including buttons, pottery, blacksmith tools, weapons, and writing tablets. And in excavations during 2025, scientists uncovered trash pits containing English and Native relics side by side. When combined with the “CROATOAN” engravings White found, there is strong historical evidence to support the idea that the English did, indeed, integrate with the Indigenous people on Hatteras in order to survive.
Can the Mystery of Roanoke Be Solved?
As artifacts from the area continue to erode and oral histories are altered by time, solving the Roanoke riddle seems like an ever-accelerating race against the clock to restore the past. The last hope to unravel the disappearance might come from relatively new biotechnology, such as DNA tracing. For the last 20 years, genetic researchers have been pursuing thousands of potential descendants who could link the mixed ancestries. While they’ve found good leads, so far, nothing definitive has revealed a new truth.
If the assimilation version is correct, though, the lost colony might be even more enchanting than any unsolved mystery. It would turn the tale into an often unheard-of story, one without an enemy or intercultural violence. It would flip the longstanding narrative of merciless European-Native relationships and colonial dominance into one of cooperation and exchange, and a glimpse into early America’s aspirations to coexist peacefully.
Today, travelers to OBX can explore the preserved, abandoned Roanoke colony by visiting the Fort Raleigh National Site, home to 355 acres of gorgeous heritage trails and coastal Atlantic wildlife.
Watch Out for Your Final Rental Car Bill — There May Be Unfair Charges
Beast01/Shutterstock
https://www.fodors.com/news/photos/watch-out-for-your-final-rental-car-bill-there-may-be-unfair-charges
Be diligent with documentation to avoid rental car charges for damage that’s not your fault.
A few years back, I rented a car for a couple of days during a visit to Denver, and the whole trip went smoothly. So imagine my surprise when I walked out to the hotel parking lot on my last morning and saw that the back of one side-view mirror was missing, exposing cracked black plastic underneath. I almost immediately panicked—I hadn’t purchased rental insurance and had no car insurance of my own at the time, so I knew I’d be responsible for the damage.
Because I hadn’t hit anything while driving, I assumed this must have been the result of a parking lot hit-and-run. Thus began a whirlwind morning as I requested security camera footage from the hotel and filed an incident report online, checking my watch every few minutes to be sure I wouldn’t miss my impending flight. When I brought the car back to the rental company on the way to the airport, the drop-off attendant noted the exposed mirror, so I signed a damage report without a thought and jotted down that I was looking for footage from the hotel to find the person responsible.
But as I was boarding the plane, I got a call from the hotel security guard, who told me that the footage clearly showed the damage had been there since I first pulled the car into the lot. When I finally looked at the photos I’d taken of my rental, I realized that I’d been mistaken—the damage had been there all along, I just hadn’t noticed it until my last day.
There was just one problem: when I’d picked up the car, I’d forgotten to take the pre-rental photos in the lot, instead snapping them after 30 minutes of driving when I’d pulled over. This, plus my signature on the damage claim, meant the rental company still sent me a $326 bill for the repairs.
After many weeks of phone calls and emails, in which I explained the situation and insisted that the company check the records of the car’s rentals before mine, they finally dropped the claim and closed the case. I’ve since rented from the same company many times, but with a few key differences in my approach. Here is what I learned.
1 OF 5
Avoid Rentals With Pre-existing Damage
Inspect cars closely, and if you see that the vehicle you’ve been assigned is damaged in some way, either ask for a different rental or make sure that the company has a record of that damage so you don’t take the blame. “Always point out any inconsistencies to the rental agent. Make sure that they note them in the rental papers,” says Alen Baibekov, CEO of car rental booking platform Economy Bookings.
2 OF 5
Don’t Skip the Pre-rental Photos or Video
Take a photo (or even better, a video) of the external condition of the car before driving away, and make sure your footage has a time stamp. If you see any interior damage or the gas gauge at less than full, take a photo of that as well. When picking up a car at night, use your flashlight, take flash photos, or drive to the closest well-lit area before snapping pictures.
3 OF 5
Take Photos at Drop-off, Too
In case something happens to the car between the drop-off and the return inspection, take photos or a video at the end, too. This is especially important if the drop-off is after hours or unattended. Make sure you have a timestamped photo of the odometer to show the final mileage and that the tank is full. And don’t delete the photos right away—you may not receive word of a claim until a couple of months afterwards, so hang on to the evidence.
Unlike what I did, “Don’t sign papers acknowledging damage charges if you believe they were present before,” says Baibekov. “The process of disputing damage charges is never easy, but by being more cautious, there is less of a chance that the rental agency will try to treat you unjustly.”
4 OF 5
Coverage Is Worth It
Anyone who has rented a car before knows that the rental companies can be pushy about upcharges. “The biggest ‘hidden fees’ issue we see is upselling unnecessary insurance by making customers feel that their coverage isn’t enough,” says Baibekov. It’s alright if you don’t have car insurance yourself or opt out of the insurance provided by the rental company, but don’t go completely unprotected. Third-party booking sites like AAA sometimes offer a cheaper insurance package than the rental company, and many credit cards offer secondary coverage, too.
5 OF 5
Don’t Be Afraid to Push Back
If you are charged for rental car damage that you don’t believe was your fault, don’t just accept the claim and pay the invoice. Provide all the documentation and photos you have and make the phone calls, even though navigating the phone tree is a pain. In my case, it’s exactly what prevented me from paying $326.
Danny Karon, an attorney who has been involved with several class-action lawsuits against rental car companies, has had personal as well as professional experience with this. Karon was charged a fee for a speeding ticket by a rental car company, but when he researched the ticket himself, he discovered that the radar camera’s footage was of a completely different vehicle than the one he’d driven. So Karon fought not only for the charge to be dropped but also for a fee to cover the time he’d spent looking into the charge. “I didn’t take any crap from them, and you shouldn’t either,” he says. “If you avoid a victim mentality, that will serve you well. Don’t be a crab, don’t fight everybody. Think about when it matters and pick your opportunities.”
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