(This story has been updated and corrected to include the highest-priced hotel transactions of 2021 in California.)
Global investor Blackstone sold the historic La Quinta Resort & Club near Palm Springs to a British private equity firm for $255 million, the largest total price paid for a hotel in Southern California in more than two years.
The sprawling 45-acre, 785-room resort at 49499 Eisenhower Drive in La Quinta, in Southern California’s Coachella Valley, became a desert retreat for Hollywood celebrities and a popular location for filming movies and television shows after its debut in 1926. It was acquired by an affiliate of British private equity firm Henderson Park for the highest price for a hotel in the desert resort cities east of Los Angeles, according to CoStar data.
The sale, which closed in December, came at the end of a record year for U.S. hotel transactions as private equity funds raised billions of dollars in anticipation of a tidal wave of hotel foreclosures that has not materialized, said Alan Reay, president of Irvine, California-based hotel brokerage firm Atlas Hospitality Group.
The nearly $41 billion in nationwide hotel sales volume in 2021 slightly surpassed the $40.5 billion spent in 2018, according to CoStar’s latest U.S. Hospitality Capital Markets Report.
“We’re coming off the worst downturn in history, and yet buyers are paying high prices as if COVID never happened and everything in the future is going to be bright and rosy,” Reay said. “These companies and funds have tons of reserves that they still need to place in hotels.”
Competition for deals has spilled into the first weeks of 2022, Reay said, and he anticipates buyers will outnumber sellers at least through the first six months of the year, which should maintain the upward pressure on prices.
Blackstone acquired the La Quinta Resort as part of its $1.69 billion purchase in 2018 of a portfolio of properties from GIC, the sovereign wealth fund of Singapore. The deal, which also included the Grand Wailea Resort Hotel & Spa on the island of Maui and the Arizona Biltmore in Phoenix, valued the La Quinta at $149 million at the time.
Henderson Park, which specializes in hotels and also owns offices, warehouses and other commercial properties across Europe, the United Kingdom and Ireland, last year bought 12 Hilton-branded hotels with a total of 2,424 rooms across the U.K. and Ireland. The La Quinta is the first commercial property it has acquired in the United States.
The sale is the highest total price paid for a Southern California hotel since December 2019, when Maybourne Hotel Group, also based in London, bought the upscale Montage boutique hotel in Beverly Hills for $397.6 million, or just under $2 million per room, according to CoStar data.
It's the third-highest hotel sale of 2021 by total price. Boardwalk Investments Group in late December bought the Hotel Villagio at The Estate Yountville in Yountville, California, from Brookfield Asset Management for $266.4 million, or $2.4 million per key. In April, Sunstone Hotel Investors bought the Montage Healdsburg from Ohana Real Estate, based in Redwood City, California, for $265 million, or just over $2 million per key.
With the acquisition, Henderson Park's portfolio now totals 9,300 rooms, including hotels in France, Greece and Spain. The firm recently acquired the business and hotel management platform of Amaris Hospitality and launched a new hotel asset management business called Klarent Hospitality.
The buyer and seller did not return requests for comment from CoStar News, nor did management firm Pyramid Hotel Group.