SAN JOSE — A hotel cluster in San Jose with hundreds of rooms faces a loan foreclosure as soon as this month if the property’s owner doesn’t cure the delinquent financing.
The 204-room hotel site consists of a Motel 6 and a Super 8 by Wyndham, according to documents on file with the Santa Clara County Recorder’s Office.
Choice Hotels International provided the hotel complex with a $21.7 million loan in August 2024 and is now pressing ahead with a foreclosure proceeding before the end of October, county property documents show.
An affiliate headed up by Texas-based lodging executive Jagmohan Dhillon obtained the loan from Choice Hotels. The hotel complex is at 2560 Fontaine Rd. near the interchange of U.S. Highway 101 and Tully Road.
An affiliate that Dhillon also controls is in default on a 104-unit lodging property at 4673 Lassen Road in Livermore. The affiliate for the Livermore hotel has filed for bankruptcy.
The south San Jose hotel complex that faces foreclosure is one of several hotel sites that affiliates controlled by private equity firm Blackstone Group sold in recent years to an array of buyers.
The potential foreclosure for the San Jose hotel property offers a fresh reminder that financial woes still linger over the Bay Area lodging sector.
Oakland’s largest hotel, the 500-room Oakland Marriott City Center at 1001 Broadway in the downtown district, was seized by a lender in July due to a delinquent $100 million loan.
Across the street in downtown Oakland, the Courtyard Oakland Downtown was bought in October 2024 by Core Capital for $10.6 million, one-fourth of the $43.8 million that the seller, a Gaw Capital Partners affiliate, paid in 2016.
A dual-branded 18-story hotel tower at 1431 Jefferson St. in downtown Oakland was taken back by its lender through a deed in lieu of foreclosure filing that stated the unpaid debt on that hotel was $117 million.
In downtown San Jose, the South Bay city’s largest hotel, the Signia by Hilton, was seized by its lender through a foreclosure that valued the downtown hotel at $81 million — far less than a recent appraisal.
Park Hotels & Resorts has ceased making payments on a $725 million loan that had two major San Francisco hotels as collateral: the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco.
In 2023, the historic 135-room Huntington Hotel, perched on San Francisco’s Nob Hill, was bought through a foreclosure. The new owner paid about $29.3 million — a price that was roughly one-third the hotel’s assessed value of $87.6 million at the time of the foreclosure proceeding.
Foreclosures and failed property loans this year have jolted hotel purchase deals in both the Bay Area and California, according to a report released by Atlas Hospitality Group, which tracks the lodging market.
An estimated 113 hotels were sold in the first half of 2025 in California, down 7.4% from the 122 hotels that traded hands statewide over the similar period in 2024, Atlas reported.
“Higher interest rates and continued disconnect between buyer and seller price expectations continue to create downward pressure on hotel sales transactions,” Alan Reay, president of Atlas Hospitality, said in the report.