Hyatt Hotels has bought the Woodfin Suites complex in Emeryville and has re-branded the prominent hotel under the Hyatt Summerfield Suites flag, company officials said Tuesday.
The purchase of the East Bay hotel was part of a $76.5 million deal by Hyatt to snap up three Woodfin Suites hotels in Emeryville, Orange County and the San Diego area.
The 234-room Emeryville hotel was bought for an estimated $31.4 million. That's based on a price-per-room of $134,000 for the three hotels combined. Hyatt didn't officially disclose a separate price for the East Bay hotel, which is 11 years old.
"It's a great buy for Hyatt," said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California hotel market. "Hyatt is stepping into some quality assets with all three of these hotels."
Besides the price, the location of the Emeryville hotel is seen as ideal. The lodging is a short distance from the east end of the Bay Bridge.
"You have a major corporate presence in Emeryville, and it has great proximity to San Francisco," said Mark Fraioli, a vice president with the hotels division of Jones Lang LaSalle, a commercial realty firm.
When hotel rooms fill up in San Francisco, guests are forced to seek lodging in nearby cities.
"San Francisco creates compression in the hotel market," Fraioli said. "If you have events or conventions in San Francisco, rooms become less available there."
The deals also were a way for Hyatt to expand its footprint, the hotel giant said.
"These properties are great additions to the Hyatt Summerfield Suites portfolio in markets where the brand is not currently represented," said Steve Haggerty, global head of real estate development for Hyatt Hotels.
At present, Hyatt has 11 hotels of all brands in the Bay Area, including three Summerfield Suites properties, according to the company online site. Four of the Hyatts are in the East Bay and three are in San Francisco, including the iconic Hyatt Regency.
It appears that Hyatt obtained a favorable purchase price, said analysts, who cited value trends for the hotel in Emeryville, which sold for more than $31 million on May 20.
"You can buy hotels at below replacement costs, you can get into strategic markets like the Bay Area," said Andrea Grigg, a senior vice president with Jones Lang LaSalle.
In 2005, the hotel was valued at $41.1 million based on its financing at that time, according to Reay. In late 2007 or early 2008, at the peak of the commercial real estate bubble, hotels in Emeryville would have been worth $60 million. At present, the cost to build the hotel from scratch would be $50 million, Reay estimated.
"Hyatt Summerfield Suites is almost a quasi-residential concept," Fraioli said. "Most hotels aren't built that way. Typically, you would have to start from the ground up. This was a rare opportunity for Hyatt to buy an existing asset that suits their brand."
The company's Summerfield brand falls into a Hyatt unit called Hyatt select service. The select group has outperformed the company's full-service unit.
During the fourth quarter that ended in December, Hyatt select-service generated a 9.5 percent increase in room revenue, while full service was up 3.9 percent.
The addition of the three inns leaves Hyatt with 38 Summerfield Suites hotels.
Customers can expect significant improvements at the new Summerfield Suites in Emeryville and Southern California.
Hyatt intends to undertake a major renovation of all three properties. The hotel company intends to spend $15 million on the three as a group. Hyatt didn't specify how much of that cash it would deploy in Emeryville.
The seller of the hotels, San Diego-based Hardage Group, used the sales of the properties to pay off $110 million in debt.
"The Emeryville hotel will do really well at the price that Hyatt paid," Reay said.
Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.