The exceptional hotel investment market is reminiscent of the Great Recession. But it's not all bad news, and Atlas Hospitality president Alan Reay says its the best he's seen the business perform in the last 25 years.

In Atlas' mid-year California investment report—which tracks hotel buys in the state—sales stats are very reminiscent of 2006, the peak year before the investment market (and entire US economy) crashed in the credit crunch. More than $4B in hotels traded so far this year, a 64% jump from the same period in 2014, including a 51% jump in sales in Southern California.

Alan says these sales have been shadowed by RevPAR improvements as a whole. And that has fed an investor frenzy fueled by low interest rates and a chase for yield that appears better than other real estate assets. But Atlas data shows investments were wildly uneven throughout the state. In San Diego County, prices paid by investors per room spiked 43% to $192k/room. Places like San Francisco and LA saw even crazier jumps: 124% to $489,300/room and 240.5% stratospheric rise to $305k/room, respectively. In San Diego, the largest hotel sold so far this year was the Hyatt Regency La Jolla at Aventine, sold by Strategic Hotels & Resorts to a JV between Walton Street Capital and JMA Ventures for $118M. 

The most expensive sale so far this year in San Diego was the Fairmont Grand Del Mar, which sold to FRHI Hotels & Resorts for more than $259M. It was those areas with percent declines that have the ghost of 2006 haunting the stats, Alan says. Places like Riverside, Fresno, Alameda and Sonoma saw percent declines on per room prices paid anywhere from 18% to more than 50%, according to Atlas' report. “Through the first six months in 2015, the percentage sales decline…almost mirrors 2007 for the first six months,” Alan says. “I don't want to say that leads us to 2017 being 2009 again. But I just don't see how we can have the kind of appreciation that we've seen in the last 12-24 months continue.”