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West Coast Markets Outperform for the Hotel Sector

Two Roads Hospitality is pushing ahead with its expansion amid expectations of solid growth on the west coast of the U.S.

Two Roads Hospitality is expanding the Alila Hotels & Resorts brand in North America after buying the Singapore-based hotel brand in 2015, the company announced on Thursday, in a bid to continue its growth strategy.

The first of the Alila Hotels & Resorts in North America will be the Ventana Big Sur, opening on California’s Big Sur coastline in the fall of 2017, according to the company. The region is famous for attracting beachgoers, hikers, campers and driving enthusiasts to its two-lane, winding Route 1.

Two Roads Hospitality, a collection of upscale independent hotels, resorts and residences, will invest in the revitalization of an existing hotel, and create a luxury resort with 59 redone guest rooms. The hotel will also feature the full-service spa and a restaurant, among other amenities.

“The introduction of Alila Hotels & Resorts to the North American market is a significant milestone in Two Roads’ international growth strategy,” said a statement from Jamie Sabatier, CEO of Two Roads Hospitality.

Two Roads is pushing ahead with its expansion amid expectations of solid growth on the west coast of the U.S.—even as expansion is uneven in other regions. In its Hotel Investment Outlook for 2017, real estate services firm JLL estimates that growth would be strongest in secondary markets, Washington, D.C. and on the west coast. In its weekly hotel report, STR found that among the hotel industry’s top 25 markets, San Mateo, Calif. saw the largest year-over-year increase in revenue per available room (RevPAR) on a weekly basis, at 9.0 percent, to $235.25, due to the week’s highest rise in average daily rate (ADR), shoring up JLL estimate of the west coast as one of the strongest hotel markets for 2017.

The U.S. saw a record share of off-shore capital in 2016, but 2017 is positioned to the year of the domestic investor, JLL states in its report. Private equity funds, such as Geolo Capital, which backs Two Roads, and REITs are the main drivers of capital into the sector. In 2016 the U.S. ranked fifth among countries with the most active domestic buyers, with $28 billion in transactions.

Domestic investors have good reason to look to domestic markets. Despite increased supply, occupancy levels have held up, and came in at 78 percent, according to STR’s weekly report. The market has yet to finish out the rest of the year, after seasonal travel has died down.

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