Park Hotels & Resorts, which manages two of San Francisco’s most prominent hotels, has decided to turn over the keys to the properties, effectively relinquishing a city that has faced many economic challenges as of late.
On Monday, Park Hotel stopped making payments on the $725 million loan tied to the Hilton Union Square and Parc 55, which together have a total of nearly 3,000 rooms and are located a few blocks from the once-bustling Moscone Center conference hall. The slowdown in the economy along with the recent remote-working trend, which has emptied offices across the country, are some of the factors leading to the decline of the commercial real estate market. The decline in the tech industry and a reduction in Moscone’s conference schedule have also contributed to the struggle downtown San Francisco has faced.
“Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges” that will reduce demand for business and leisure travel, said Thomas J. Baltimore Jr., the chief executive of Park Hotels & Resorts.
Last month, the company informed analysts that the hotels contributed only a small portion to its 2023 guidance and had warned investors that it was weighing its options for the loan. Park Hotels & Resorts’ portfolio comprises 46 properties, including Hiltons in Honolulu, Chicago, Midtown Manhattan, and San Diego.
As Park Hotels & Resorts makes its abrupt exit, others fear that other hoteliers might follow suit. As business travel still hasn’t returned to pre-pandemic levels, San Francisco heavily relies on this sector. While JPMorgan Chase brought back its annual healthcare conference, other events, including VMWare’s tech conference, have moved out.
Still, not everyone is giving up, and James Risoleo, the CEO of Host Hotels & Resorts, the parent company of the Marriott Marquis San Francisco, told analysts in May that “We’re not writing San Francisco off.” Although concerns loom, San Francisco is the center of tech and artificial intelligence, and as the world returns, Risoleo is confident that business will pick up.
