Owner abandons San Francisco hotels as city begs for tourists to return

San Francisco’s latest tourist campaign was dealt a blow after the owner of two of the city’s largest hotels announced this month they will no longer invest in the properties.

Park Hotels & Resorts announced on Monday they will cease paying a $725 million loan on two of their hotels in the California city, citing a number of factors including “street conditions” and a slower-than-expected recovery from the COVID-19 pandemic. Following the pandemic, the city has faced a perception of having high crime and a population of unhoused persons, though the city’s estimated unhoused population decreased from 2019 to 2022, according to city data.

The announcement was just days after the city launched a new campaign effort aimed at bringing tourists back to San Francisco, which has struggled to return to its pre-pandemic numbers. Hotel occupancy in the city typically remained above 80 percent prior to the pandemic, which caused that number to plummet to 14 percent. In March 2023, only 66 percent of hotel rooms in the city were occupied, according to city data.

The company’s CEO Thomas J. Baltimore, Jr. wrote in a statement that several factors contributed to the decision to shut down the Hilton San Francisco Union Square and the Parc 55, which combined account for more than 3,000 hotel rooms.

The “continued burden” of operating the hotels was “too significant” on the company’s balance sheet to keep them open,” the statement reads.

“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 wrote.

The hotels are expected to remain open despite the company pulling their investments. The SF Hotel Council told KGO that “it is not uncommon for hotel ownership to change.”

“While the timing of this may appear less than ideal, we fully expect new ownership to come forth,” the statement reads.

Meanwhile, the city launched the multi-million dollar “Always San Francisco” campaign last week which seeks to attract tourists to the Bay Area city, according to local ABC affiliate KGO.

The campaign highlights its historic neighborhood and landmarks, which for decades brought in a large number of tourists that helped fuel the local economy. It also features a television commercial that is airing in cities across the country including New York, Boston, Washington, D.C., Houston, and Chicago, KGO reported.

Newsweek reached out to the San Francisco Travel Association for comment via email.

Other businesses have also shut down locations in downtown San Francisco. Old Navy announced in May that they will be closing their flagship store in the downtown area of the city starting July 1. The company denied that rising crime contributed to the decision, instead saying they believed they could best serve customers elsewhere. Other businesses to move out of the city include T-Mobile and Whole Foods, which said they were unable to “ensure the safety” of their staff.

Still, crime in San Francisco has been named as a challenge for businesses operating in the city. In 2022, the city reported 61,715 instances of larceny or theft, 55 homicides, 2,569 aggravated assaults, 5,746 burglaries and 2,357 arsons, according to city data. These numbers are roughly on par with the years prior to the pandemic, which saw an increase in crime occurrences from the early 2010s.