IRVINE, CA-Hotel sales in California this year have almost nowhere to go but up in terms of number of deals, but prices will continue to decline, according to a report from Atlas Hospitality Group. Atlas founder and president Alan Reay tells that his firm forecasts hotel sales to more than double this year in dollar volume from the $525 million total of 2009 sales. That $525 million in 2009 was down more than 75% from 2008 sales of more than $2.1 billion.

Reay says prices will drop by 10% to 20% this year after falling 30% last year. “We expect to see 150 to 175 transactions,” the Atlas president says, up from 92 transactions in 2009, which was the lowest number of transactions in the more than 15 years that Atlas has been tracking the state’s hotel sales. The 92 sales in 2009 compared with 187 transactions in 2008.

Distress is the chief factor driving the market right now, and Reay says that where the sales figures go this year will depend to a large extent on what happens to the distressed properties. Thus far, conventional lenders have been extending loans rather than foreclosing, and special servicers of CMBS loans have been even more reluctant to foreclose.

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