Wheelock Street Buys Two Hotels in San Diego’s Gaslamp Quarter

Hotels remain a hot commodity in the San Diego metro, where occupancy rates have recovered to pre-pandemic levels, as an acquisition binge that saw several hotels acquired for healthy prices in 2021 continues in 2022.

The latest hotel trade was announced this week by Wheelock Street Capital, which has acquired two hotels in San Diego’s tourist-friendly Gaslamp Quarter.

Wheelock Street is acquiring two premium limited service assets, the 90-room Courtyard by Marriott San Diego Gaslamp and the 126-room Moxy San Diego Downtown/Gaslamp Quarter. The purchase price for the deal, which was arranged by CBRE, was not disclosed.

The acquisition marks a return to the San Diego hospitality market for Wheelock, which previously owned the Courtyard San Diego Downtown, the Marriott Mission Valley and Hilton Del Mar.

Wheelock said Island Hospitality, one of the leading US hospitality managers with a portfolio of more than 75 hotels, will assume management responsibilities for the acquisitions.

In December, a fund affiliated with Trinity Investments acquired a 50% stake in the Omni San Diego from JMI Realty, GlobeSt reported. JMI, the original developer retained a 50% stake in the 511-room hotel, which is located in the Gaslamp Quarter. JMI continues to manage the property. 

 Other San Diego hotel trades in 2021 included the sale of the 210-room Estancia La Jolla Hotel & Spa for $108M to the Pebblebrook Hotel Trust, which owns seven other properties in San Diego. A partnership between Kawa Capital Management and CL Hotels acquired the 110-room Hotel La Jolla; the hotel’s operator, Curio Collection Hilton, renewed its lease for 20 years.

Hotel occupancy rates in San Diego County surged over pre-pandemic levels earlier this month, at one point reaching nearly 80% and becoming the sixth-highest market in the US in terms of hotel occupancy and the second-highest in the Western region.

However, the latest weekly hotel performance report from STR saw San Diego’s occupancy dip to 74.5%, dropping it behind San Francisco (79%), Seattle (76.2% and Los Angeles (74.9%) on the Western leaderboard.

A total of more than 335K hotel room nights were sold throughout San Diego County during the week of May 15-22, a reduction of about 8,000 from the week before, but matching typical pre-pandemic seasonal patterns for this time of year and coming close to the number of rooms sold during the same week in 2019.

Daily room rates in San Diego are holding steady at about $197, which only trails San Francisco ($235) and LA ($202) in the region.