On June 5, the owner of the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco—the largest and fourth-largest hotels in the city—said that it had stopped payment on its $725 million combined mortgage loan and would likely relinquish both properties to the lender.
According to an article in the San Francisco Standard, stubbornly high office-vacancy rates in the city are contributing to greatly reduced hotel revenues; in 2019, Hilton Union Square and Parc 55 earned $175.4 million and $95 million in room revenue, respectively. In 2022, those revenues were less than $30 million for each, according to data provided by hotel consulting firm Atlas Hospitality Group.
The properties’ owner, Park Hotels & Resorts, had sold another of its San Francisco hotels, the 360-room Le Meridien in the financial district, during the Covid pandemic. Park also owns the 344-room JW Marriott Union Square and the 316-room Hyatt Centric Fisherman’s Wharf.
Alex Bastian, president and CEO of the Hotel Council of San Francisco, said in a statement that the Hilton Union Square and Parc 55 “are open for business and will stay open for business. ... 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.”
Will This Affect Medical Events?
With a large number of life-science company meetings and medical-association conventions set to take place in San Francisco in the second half of 2023 and throughout 2024, the financial health of the Hilton, Parc 55, and even other hotels in the city might be something for meeting hosts to keep an eye on. The reason: Hotels with owners who stop debt-service payments might not maintain the same level of staffing and maintenance.
According to this article in the San Francisco Chronicle, more than 30 San Francisco hotel owners face mortgage deadlines in the next several months.
“You tend to see issues particularly in large, full-service hotels that have been focused on the business and commercial side, like those focused on meetings and conventions,” Alan Reay, president of Atlas Hospitality Group, told the Standard.
One bit of good news for the city is that organizers of the J.P. Morgan healthcare conference also announced on June 5 that they would host the event there again in January 2024—but with a warning they expressed in a letter to Mayor London Breed, as reported by ABC 7 News San Francisco. “One major concern we continue to hear from our clients is the price gouging and lack of flexibility exhibited by San Francisco's hotels during the conference period,” the organizers wrote.
