A New York-based privately owned real estate investment, development and management firm, AWH Partners, acquired its third hotel in the Greater Seattle area on Monday. The Seattle Airport Marriott was purchased for $91.1 million, or $198,475 per room, from an entity owned by Host Hotels & Resorts, a luxury hotel owner headquartered in Maryland, according to public records.
Located at 3201 South 176th Street, the Seattle Airport Marriott is a 459-room hotel with 18,000 square feet of meeting space. It was built in 1980 and underwent a major renovation in 2011 that gave the ballroom area a $2.7 million update, which included upgrades to the meeting facilities, and expanded the Aquaterra Restaurant. John Gordon, a senior vice president for Kidder Mathews’ Valuation Advisory Services, says the hotel is the sixth largest hotel in the state and one of the leading near the airport. “The Marriott and the Hilton are really the two big market leaders in terms of room rate near the airport,” said Gordon, “They’re good properties, they are both fine hotels.”
Right now we’re at the peak of occupancy in primary markets such as downtown Seattle, South Lake Union, Bellevue and SeaTac
According to Kidder Mathews’ 2015 Fourth Quarter Seattle Hotel Report, a strong lodging market performance attracts new development, which in turn increases the market supply and puts downward pressure on occupancy rates and room prices. Once conditions have deteriorated to a sufficient extent, the pace of construction slows, hotel performance gradually recovers, and the cycle begins again.
“Right now we’re at the peak of occupancy in primary markets such as downtown Seattle, South Lake Union, Bellevue and SeaTac (where Seattle-Tacoma International Airport is located),” said Gordon. “In all of those markets, occupancy is at the highest levels I’ve seen.”
For the lodging markets in and near Seattle, this pattern has recurred at intervals of eight to ten years. Most of these markets are now near the peak of the cycle, with high rates of occupancy, rapid growth in room prices, and numerous hotels under construction or proposed, says the same report. Kidder Mathews expects that market occupancy rates, currently over 80 percent, will decline in the near term, reaching a trough in 2018 and recovering to more typical long term levels by 2022. According to the same report, room prices, averaging around $114 near the airport, in most urban markets are well above pre-recession levels.
According to Gordon, Seattle’s hotel market is still experiencing a demand for new supply since recovering from the last recession. “When you combine that with what’s now a strong economy, with very high occupancy rates and room prices that are going up between five and ten percent a year, those are all very attractive features for developers looking at the Seattle market,” added Gordon. “The way that the occupancy comes down is that people build more hotels, and the supply increases faster than the demand. Over the next two to three years, that is what I expect to happen.”
AWH Partners owns two other hotels in the Puget Sound region, the Embassy Suites Bellevue and Embassy Suites Seattle in Lynnwood. After selling the Seattle Marriott Hotel, Host Hotels & Resorts now owns The Westin Seattle, located near the Washington State Convention Center at 1900 5th Avenue, and W Seattle, situated near art and music centers and Pike Place Market at 1112 4th Avenue. Efforts to obtain a comment from the buyer were unanswered.