Two Ocean City hotels hit the market as an $8.75 million package deal

Two Ocean City hotels are up for sale as an $8.75 million package.

The Blue Water Inn and the Cove hotel can also be sold separately. At Eighth Street and Ocean Avenue, the Blue Water — which has been on and off the market since August — is listed on its own for $3.9 million. Across a parking lot on Ocean Avenue, the Cove was just listed in recent weeks for $5.5 million.

“It is a very rare and unique opportunity, especially if somebody can come in and buy both at the same time,” said Kristina Doliszny, vice president of Ocean City Real Estate Group. “That is not standard [or] typical to have a large parcel like this in such a congested area.”

Less than two blocks from the beach, the properties are currently owned by “a large commercial investment group” that includes brother hoteliers Yogi and Raj Khatiwala. Doliszny declined to identify the other investors. The Khatiwalas bought the hotels in 2022, according to property records, and are “looking to expand,” perhaps by purchasing a larger property, Doliszny said.

Both hotels remain open and are taking reservations for the summer season.

As a result of recent renovations, the Cove “is turnkey,” Doliszny said. “Someone can walk into it and start operating on day one. It‘s beautiful inside.”

The Cove property consists of 29 hotel rooms, 10 additional rooms that can house 29 employees or Shore seasonal workers, a pool, and 25 parking spots, according to the listing.

The adjacent Blue Water Inn, meanwhile, is “probably the last value-add property available in Ocean City,” Doliszny said. In real estate parlance, value-add properties have some room for improvement.

As the Shore gets increasingly expensive, pricing out some longtime visitors, the Blue Water Inn is “one of the most affordable places to stay,” Doliszny said. As of Thursday, a room for this Saturday night was less than $150 on the hotel’s website.

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The Blue Water has 32 hotel rooms, five apartments, three leased commercial units on street level, and 28 parking spaces, according to the listing.

Given the number of visitors Ocean City gets each summer and a continued dearth of short-term rentals there, a buyer’s investment in these properties could pay off big time, Doliszny said.

“The majority of [hotels] got sold off to development over the course of the last 10 to 20 years,” Doliszny said. “The depletion of hotels in Ocean City, it‘s a tough situation.”

So when it comes to these listings, she said, “there are endless opportunities” for hoteliers — and others.

Doliszny added: “All these are zoned in the hospitality zone, which gives a lot of opportunities for redevelopment.”