Park Hotels & Resorts, one of the nation’s largest hotel chains, is pulling out of two hotels in downtown San Francisco, saying it lacks confidence in the city’s ability to deal with “significant challenges.”
Park Hotels said it has defaulted on $725 million in debt on its two San Francisco properties, the 1,921-room Hilton San Francisco and the 1,024-room Parc 55 San Francisco.
Both hotels are close to the Moscone Center, a convention center that before the pandemic drew many professionals to the area. San Francisco hasn’t fully recovered since COVID-19 shut down the economy in 2020, with many office buildings still empty as workers continue to work remotely. Last year’s spike in thefts and homelessness have forced some retailers out of the city.
Thomas J. Baltimore, Jr., chairman and CEO of Park Hotels, cited empty offices and reduced business travel as reasons that have made hotel ownership unviable.
“Now more than ever, we believe San Francisco’s road to recovery remains strong and fraught with significant challenges,” Baltimore said in a statement this week.
He said the city’s problems are: “hire large projects; concerns about the condition of the road; less return to the office than in the cities of friends; and a calendar less than expected until 2027 which will disrupt business and entertainment and can reduce stress. in the city in the future.”
Both properties are expected to be spun off from the Park Hotels group, which has 46 hotels and resorts with more than 29,000 rooms.
The pulse of the business trip
Before the plague, San Francisco was a magnet for business travel. But since the crisis began, event bookings have steadily declined and traffic has declined.
In 2022, San Francisco had the lowest business travel revenue of any major metro area, according to a study by the American Hotel & Lodging Association (AHLA). Revenue is down about 69%, or $1.68 billion, compared to 2019.
To be sure, some businesses are still turning to the city for events, with JPMorgan holding its annual healthcare conference this year in Union Square after a two-year hiatus related to the pandemic. But some businesses have canceled events, hampered in part by street conditions such as graffiti and homelessness.
And some retailers have closed their locations in San Francisco, citing crime and other factors. Whole Foods in April temporarily closed one of its flagship locations just over a year after it opened, citing concerns that crime in the area was putting its employees at risk. Other retailers that have announced downtown closures include Nordstorm, Anthropologie and Office Depot, according to local station KRON.