The city of San Francisco used to pride itself on the number of business conventions that were held there each year and it was great for all of the hotels in the city too.
Not so much anymore.
The owner of two of the biggest hotels in the city is bailing out, and he is citing the same reasons that so many other businesses have in recent months.
He is concerned about all the crime and has doubts about the city’s ability to recover.
The FOX Business Network reports:
Major hotelier abandoning San Francisco properties, says city’s ‘path to recovery remains clouded’
One of the largest publicly traded real estate investment trusts in the U.S. plans to close two of San Francisco’s major downtown hotels, saying the city’s streets are unsafe and expressing doubts about the area’s ability to recover.
Park Hotels & Resorts Inc. announced this week that it stopped making payments on a $725 million loan that secured both its 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco properties and expects to remove them from its portfolio, citing several “major challenges” in the California city.
“This past week we made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan,” Park Hotels CEO Thomas J. Baltimore Jr. said in a statement. “After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market.”
“Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges — both old and new: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future,” Baltimore said.
To make matters worse, the city just spent millions on an ad campaign meant to try to save tourism:
San Francisco’s tourism board launched a $6M ad campaign to overcome the city’s global reputation as a drug and crime-ridden hell hole. Six days later, the owner of two of the city’s biggest hotels announced it was abandoning them because it lost faith that the city can recover. pic.twitter.com/uaZRXWpD3R
— Michael Shellenberger (@shellenberger) June 6, 2023
San Francisco is locked in a doom loop and it’s just beginning.
This is going to get worse.