A Japanese company bought Seattle’s 256-room Hilton Hotel in one of the downtown area's largest hospitality sales in years as high borrowing costs have slowed hotel investment activity across the country.
APA Group, based in Tokyo, bought the 24-story hotel at 1301 Sixth Ave. for almost $68.8 million, or $268,555 per room, from New York-based Westbrook Partners. That price is roughly 14% more than what Westbrook paid in its September 2016 acquisition, according to King County property records.
The Hilton is APA's first acquisition in the United States. The company has changed the name of the hotel to Coast Seattle Downtown Hotel, though the property will continue to be managed by Stonebridge Hospitality Management under the new ownership, APA Group said in a statement.
The Hilton transaction is the first major downtown Seattle hotel sale since InnVest Hotels bought the 189-room Kimpton Hotel Monaco Seattle Downtown for $63.3 million from Pebblebrook Hotels Trust in May of last year, CoStar data shows.
Hotel sales volume in greater Seattle, similar to national trends, has slowed to $330 million over the past 12 months — almost 25% below the three-year average of $436 million — as disruptions in capital markets have slowed sale activity in the region and across the United States, according to a CoStar Market Analytics report.
National hotel sales volume decreased 50% in the first quarter of this year to just over $3 billion compared with the same period in 2023, according to CoStar's National Hospitality Report. However, lenders, owners and brokers expect deal flow to improve in the second half of this year as investors allocate more "dry powder" to hotels, especially in the luxury segment, and loan maturities force the hand of some distressed owners to sell their properties, according to the report.
North America Expansion
APA's network of more than 750 properties totaling more than 110,000 rooms in Japan make it the country’s largest hotel group. The Tokyo company also owns the Coast Hotels brand, including seven hotels in Vancouver, Victoria, Chilliwack and Prince George in British Columbia, Edmonton, Calgary, and Seattle.
The Hilton acquisition "aligns with our vision for expansion and exponential growth across North America," APA Group CEO Isshi Motoya said in a statement.
"We also look forward to playing an active part in the continued resurgence of the downtown Seattle business community,” Motoya added.
The hotel built in 1970 is within walking distance of such tourist attractions as Pike Place Market and is connected by an underground walkway to the Seattle Convention Center. The property has ballrooms, meeting spaces, a fitness center and the Redtrees restaurant and bar.
The sale comes as tourism activity has started to recover in the downtown district. SH Hotels & Resorts, a hotel brand management affiliate of Barry Sternlicht’s Starwood Capital Group, recently entered the greater Seattle market with plans to manage and rebrand downtown’s Pan Pacific Hotel.
Despite signs of recovery in tourism, a decline in corporate travel over the past year, especially in the tech sector, has weighed on the downtown hotel market's recovery, CoStar data indicates.
Downtown Seattle's 12-month average occupancy is about 70.3%, compared to annual occupancy averaging near or above 80% from 2013 through 2019, according to CoStar analytics.