As building boom approaches, Sacramento hotel occupancy grows

Hotel occupancy is continuing to improve in the Sacramento area – just as the central city is about to experience another wave of hotel construction, sparked by the building of the new Kings arena.

Market researcher PKF Consulting USA said Friday that Sacramento hotels were 75.8 percent full in October, the latest data available. That compared with 73 percent a year ago. For the first 10 months of the year, occupancy improved to 73.4 percent, up from 70.7 percent a year ago.

The numbers are a significant improvement from the recession. Through much of 2009, for example, hotel occupancy hovered around 60 percent in Sacramento.

The higher occupancy figures come as a mini-boom in hotel construction looms downtown. The Kings plan to break ground in the spring on a 250-room hotel adjacent to their new arena taking shape at Downtown Plaza. The hotel would be crowned by 69 condominium units. The hotel and the arena are scheduled to open in the fall of 2016.

Immediately to the east, a development group led by Fairfield hotel operator Presidio Cos. plans to convert the shuttered Marshall Hotel into a 10-story Hyatt Place. The structure would include 130 hotel rooms and 10 to 15 condo units.

Meanwhile, some market watchers say they think CalPERS will build a combination of condominiums and a hotel at the pension fund’s empty parcel directly south of Downtown Plaza, similar to what was proposed for the site before the recession hit. The California Public Employees’ Retirement System hasn’t said what it plans for the site.

The latest PKF numbers show room rates are rising along with occupancy. The average room went for $106.76 a night in October, a nearly 4 percent improvement from a year ago.

Among the Northern California communities surveyed by PKF, the Monterey-Carmel area remains the penthouse suite of hotel markets. The average room went for $319.12 a night in October. The busiest market in Northern California was San Francisco, where hotels were 91.2 percent occupied.

This story was originally published December 26, 2014 at 3:12 PM with the headline "As building boom approaches, Sacramento hotel occupancy grows."