Hotels in San Francisco are experiencing massive financial losses as tourism to the city has continued to drop in the years after the pandemic and as quality of life issues including homelessness and crime continue to grow in the Golden Gate City.
In June, weekend hotel occupancy rates in the San Francisco-San Mateo were shown as being down by 22% since the same period in 2019, compared to just 4% nationally, data firm CoStar Group shows, reports The Daily Mail.
Many tourists are staying away because of several factors, including the expensive prices in San Francisco.
The growing homeless population, public drug markets, and increases in crime are also keeping tourists away.
CoStar further reports that as travel for work has bounced back after the pandemic, many people are not paying for expensive trips.
Visitor numbers have also taken a hit after tech companies such as Meta and Google moved out of the Moscone Center.
Business travelers had been staying on in San Francisco to enjoy a few days in the city, but now, conferences are moving to other areas like Las Vegas, taking the tourists with them.
Meanwhile, visitors from China are declining, but tourists from Europe and India are increasingly choosing San Francisco, according to the city's travel association.
Despite the reports, Alex Bastian, chief executive of San Francisco's hotel council, said that the industry is "moving in the right direction" and he is optimistic that the city will return to being a travel destination.
However, Anna Marie Presutti, interim president of the San Francisco Travel Association, told The Wall Street Journal this week that she does not expect visitor numbers to recover until 2028 or 2029.
Two of the city's largest hotels, the Hilton Parc 55 and the Hilton San Francisco Union Square, have seen their value rates drop by a combined $1 billion and now hold a worth of $553.8 million, according to the Kroll Bond Rating Agency.
Real estate investment trust Park Hotels & Resorts has dropped both of the Hilton San Francisco hotels from its portfolio.
Tom Baltimore, the trust's chief executive, said during a first-quarter earnings call that dropping the hotels has "meaningfully improved our balance sheet and operating metrics," as the San Francisco and Los Angeles markets will likely "lag for some time."
In addition, data from the real estate analytics firm Trepp shows that the delinquency rate in commercial mortgage-backed security loans in San Francisco's hotel sector climbed from 41.6% this June, as compared to 5.7% at the same time in 2023.
The tourism industry in San Francisco could take another hit soon. Labor contracts that cover the Bay Area's roughly 10,000 hotel workers are set to expire later this month, and the union announced that 3,000 employees have voted to authorize a potential strike.
The declining hotel industry is hitting San Francisco's hospitality workers hard, forcing them to take on second jobs.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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