Historic S.J. hotel bought by lodging company

SAN JOSE >> A big historic hotel in downtown San Jose has been bought by a veteran hospitality company in a deal that produced a rare event: The hotel sold at a loss compared to its price less than five years ago.

The Westin San Jose, formerly known as the Sainte Claire Hotel, has been bought by an affiliate headed up by Khanna Enterprises, documents filed on Jan. 20 with the Santa Clara County Recorder’s Office show.

Irvine-based Khanna Enterprises paid $44.9 million for the hotel structure and the land beneath it, according to the county property records.

It appears South Korea-based Aju Hotels and Resorts, the seller of the Westin San Jose, endured a loss in value for the hotel during the years Aju owned the property.

In 2017, Aju Hotels and Resorts paid $64 million for the hotel. 2017 was one of the years when hotels in the Bay Area and elsewhere were enjoying peak values and were crowded with guests.

But just a few years later, in 2020, the coronavirus shattered the travel and hospitality industries.

The hotel’s real estate value in 2022, as measured by the recent deal, compared with the real estate value in 2017 purchase, slid 29.8% during those years.

Aju Hotels, however, says it was paid $62.3 million by the purchaser in the deal.

A representative for Aju provided this news organization with a purchase document that showed the overall deal value for the hotel — including the price of the land, the building, the furniture, and intangible values for assets in the hotel — left the overall price at the $62.3 million mark.

That would mean the overall value of the hotel in 2022 was 2.7% less than the overall value in 2017.

Despite this turn of events, Alan Reay, president of Atlas Hospitality Group, which tracks the California lodging market, believes the Westin San Jose is a topnotch lodging.

“This is a beautiful hotel, a great, historic property,” Reay said. “It’s got a great location.”

Nevertheless, it’s clear that the arrival of the coronavirus appears to have undermined the hotel’s value.

“This demonstrates the decline in value for hotels that are in markets that depend on business travel and conventions,” Reay said.

In contrast, hotels in popular markets such as the coastal regions of Monterey County and San Diego County, along with the Northern California Wine Country, are seeing record increases in their prices.

“Drive-to markets, destination markets, are seeing incredible values,” Reay said.

The 171-room Westin San Jose is located at 302 S. Market St. and is about a block away from the San Jose Convention Center.

Constructed in 1926, the six-story landmark Westin San Jose hotel was designed in an Italian Renaissance Revival and Mediterranean Revival style of architecture.

The hotel was restored in the 1990s and was then known as the Hyatt Sainte Claire. Soon after 2000, it was renamed the Hotel Sainte Claire. After another renovation, the hotel was rebranded as the Westin San Jose in 2015.