Orange County hotel sales were brisk in 2006. But the real story was sales prices.

Twenty-seven hotels changed hands last year, versus 29 in 2005, according to preliminary 2006 sales data from Irvine-based Atlas Hospitality Group. While the number of hotels sold was off slightly, the value of hotels sold surged to $742.5 million from $280.3 million in 2005.

Last year�s $338.5 million sale of the Ritz-Carlton, Laguna Niguel, drove the higher figure. The average sale price per room in 2006 was $153,872, up from $83,538 in 2005. The median price per room last year was $90,258, up nearly 24% from $72,558 in 2005. 

Topping the list last year by price�both in OC and Southern California�was the 393-room Ritz-Carlton, which sold for $861,323 per room. Chicago-based real estate investment trust Strategic Hotels & Resorts Inc. bought the Ritz-Carlton from Strategic Hotel Capital LLC, a related privately held company. The Ritz-Carlton is the 19th largest hotel in OC by rooms. The hotel completed a $42 million renovation last year. Work included a redesigned lobby, public areas, restaurant, bar and a new spa as well as a room makeover. The hotel recently opened Eno, a wine, cheese and chocolate tasting room. 

The second largest sale in OC last year was the 392-room Westin South Coast Plaza, which was part of a portfolio of hotels acquired by Marriott International Inc. from Pittsburgh-based Secon Properties. The sale was estimated at $90 million. The Westin last year remodeled its lobby and meeting space. It also added a 4,500-square-foot Terrace Pavilion, a 250-seat gazebo and an executive boardroom, according to director of sales and marketing Mike Mustafa. The Westin ranks No. 20 on the most recent Business Journal list of OC�s largest hotels by rooms.

The third biggest sale in OC was the 293-room Embassy Suites Irvine. The business hotel was sold to HEI Hospitality LLC of Norwalk, Conn., for $55 million. Embassy Suites Irvine ranked No. 34 among OC�s largest hotels by rooms last year.

Rounding out the top five hotel sales for 2006 were the Hilton Suites Orange and the Residence Inn Anaheim Resort in Garden Grove. The two hotels were part of a $215 million, four-hotel portfolio sold to Innkeepers USA Trust by Bethesda, Md.-based RLJ Urban Lodging Fund LP, an affiliate of RLJ Development LLC. The Hilton accounted for $53.1 million of the sale. The Residence Inn was $46.2 million.

That deal put the Hilton Suites Orange among the top five sales for the second year running. In 2005, RLJ Urban Lodging Fund acquired the hotel from Beverly Hills-based Hilton Hotels Corp. as part of a $72 million, three-hotel deal. The Hilton accounted for an estimated $23 million of that sale.

�Lenders and developers are very bullish and high sales prices are an indication of how well the hotel market is doing,� Atlas President Alan Reay said.

The $42 million sale of Wyndham Orange County Hotel to Newport Beach-based Makar Properties LLC placed it as the sixth largest transaction of 2006. The Costa Mesa hotel completed a renovation in November. In January, Makar filed plans with the city to turn the hotel into a combination hotel and condominium tower. The initial plans are to reduce the hotel�s room count to 200 and build a luxury condo tower with a spa and restaurant next to it along Avenue of the Arts across the street from the Renée and Henry Segerstrom Concert Hall. If those plans are approved, the hotel will close during construction.

Other full-service hotels in OC changing hands in 2006: 

• The 336-room Crowne Plaza Irvine, which accounted for $24.2 million of a portfolio sale by Irving, Texas-based FelCor Lodging Trust Inc. to Newton, Mass.-based Hospitality Properties Trust. It ranks No. 27 among OC�s largest hotels by rooms.

• The 253-room Hotel Menage (formerly Holiday Inn Anaheim Palms), which was sold for $22.5 million to Laguna Beach-based Casa Resorts Inc. by Kam Sang Properties. Hotel Menage ranks No. 44 on the list of largest hotels.

• The 202-room Embassy Suites Buena Park was sold to Grand Mission LLC for $18.5 million by Robert Dollar Co. in July.

The Ritz-Carlton was the only OC hotel deal to rank among the region�s most expensive last year.

San Diego had four of the region�s top 10 sales: the Embassy Suites San Diego, which sold for $118 million; the Embassy Suites La Jolla, which sold for $100 million; the W Hotel San Diego, which brought in $96 million; and the year-old Hotel Solamar, which brought in $87 million.

Los Angeles accounted for three of the region�s top 10 sales: the $210 million buy of the Fairmont Miramar Hotel Santa Monica; the $125 million purchase of the Burbank Airport Marriott and the $88.4 million acquisition of the Westin Long Beach. 

The Hilton Ontario Airport�part of the same portfolio as the Hilton Suites Orange�also ranked in the top 10 sales at $71 million.

The top 10 sales in Northern California, led by the 1,195-room Westin St. Francis San Francisco, brought in $750 million. The Westin accounted for $440 million of that.

Two OC hotels were among the top 10 sales in Southern California based on price per room: the Ritz-Carlton and the 130-room Vacation Village, a motel-style property dating to the 1950s in Laguna Beach. It sold for $330,769 per room.

The seven-building Vacation Village complex sits on 4 acres with a 300-foot beachfront five blocks from downtown Laguna. Westport, Conn.-based Westport Capital Partners LLC bought it.

In Los Angeles County, the Fairmont Miramar Hotel Santa Monica was No. 1 at $700,000 per room, while in San Diego, the 235-room boutique Hotel Solamar nailed the highest price there at $370,213 per room.

The highest price per room in Northern California was $668,833 for the petite 30-room Kenwood Inn Sonoma, which sold for $19.8 million. 

Reay said 2007 looks equally bright. �The volume of sales is starting off strong,� he said.

Overall room supply in OC is expected to increase by just 1.8%, according to estimates from PKF Consulting in Los Angeles. Occupancy should increase by 2% and average daily rates by 3.7%, PKF said.

Taken together, those factors are expected to bring an increase of 5% in revenue per available room, a measure of hotel profitability.

Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry publications. She specializes in hospitality, tourism and travel. Cain holds bachelor�s and master�s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late �70s. She enjoys travel, gardening, reading and spoiling her three cats.