Construction of hotels has plunged in the Bay Area, a nosedive that was unleashed by stubborn problems for hotel financing and elevated construction costs, a new report from Atlas Hospitality Group shows.
An estimated 15 hotels with an aggregate 1,610 rooms were under construction in the Bay Area during 2025, representing a sharp decline from the equivalent totals in 2024, according to the report from Atlas Hospitality. This news organization derived the totals from figures that Atlas Hospitality compiled for its report.
“Financing friction and elevated construction costs are still limiting new starts,” Alan Reay, president of Atlas Hospitality Group, wrote in the company’s report.
The number of hotels under construction in the Bay Area fell 28.6%, while the number of hotel rooms under construction in the region dropped 34.3%, an analysis of the Atlas Hospitality figures shows.
An estimated 21 hotels with an aggregate total of 2,452 rooms were under construction in the nine-county region in 2024, according to the Atlas Hospitality report.
The decline in hotel construction activity was more pronounced in the Bay Area than in Southern California.
Atlas Hospitality reported that 59 hotels were under construction in Southern California in 2025, a decline of 16.9% from the 71 hotels the year before.
These hotels represented a combined 6,399 lodging rooms under construction in Southern California during 2025, a drop of 33.8% in room construction compared with the year before.
More California hotels with more rooms opened in 2025 compared with 2024, Atlas Hospitality reported. An estimated 50 hotels with a combined 7,100 rooms opened in California in 2025.
The number of hotels that were delivered to the market and opened in 2025 jumped 42.9% from the year before. The number of lodging rooms that opened in 2025 soared by 86.9%, Atlas Hospitality reported.
The opening of the 1,600-room Gaylord Pacific Resort in the San Diego County city of Chula Vista was the primary driver of the increase in the number of new room openings in 2025 compared with the year before.
The steep decline in the number of hotels and rooms under construction shows that developers remain cautious about building new hotels in the Bay Area and throughout California, according to the report.
In a reminder of the severe problems with the Bay Area hotel market, San Francisco in 2025 had zero hotel rooms under construction in 2025, compared with a still-scant 169 rooms that were being built in that city in 2024, the report showed.
In Santa Clara County, 76 rooms were under construction in 2025, a plunge of 86.4% compared with the 557 hotel rooms that were being built in 2024.
Alameda County had 234 rooms under construction in 2025, down 48.1% from the year before.
An estimated 115 rooms were under construction in Contra Costa County in 2025, a decline of 52.3% from 2024.
San Mateo County had 92 hotel rooms under construction in 2025, unchanged from the year before.
The greatest increase in the number of hotel rooms under construction occurred in Napa County, where 626 hotel rooms were being built in 2025. That was more than double, or an increase of 138.6%, from the 262 rooms being built in 2024 in Napa County.
The largest hotel to open in Santa Clara County in 2025 was the 254-room Treehouse Hotel Silicon Valley in Sunnyvale. The largest hotel that opened its doors in Alameda County in 2025 was the 128-room Homewood Suites Fremont, Atlas Hospitality reported.
Waves of hotel loan defaults and plunging values for lodging properties have swamped the Bay Area hotel market.
Foreclosures have jolted some of the Bay Area’s largest hotels, including the Signia by Hilton hotel in downtown San Jose and the Oakland Marriott City Center in downtown Oakland.
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