A growing number of hotels in San Fransisco are preparing to leave the struggling city, following numerous retailers and businesses that packed their bags amid high crime and widespread homelessness.
Hotels in the California city are lagging behind those in comparable cities. Revenue per available room was 23 percent lower in April than during the same time in 2019, while hotels in New York City and Los Angeles are exceeding their 2019 metric, the Wall Street Journal reported.
The city's Huntington Hotel and the Yotel San Fransisco hotel were both sold after facing foreclosure in recent months. The Club Quarters San Francisco may also be heading to foreclosure. The number of embattled hotels may soon rise as more than 20 locations will face loans due in the next two years, the Journal reported.
Perhaps the biggest hit to the local market came last week when the owner of both the city's largest hotel, the Hilton San Francisco Union Square, and its fourth-largest, Parc 55, said it ceased payments on $725 million worth of loans and entered foreclosure because the city is facing "major challenges."
The decision was "very difficult, but necessary" because of "concerns over street conditions," office vacancies, and reduced conventions, said Thomas J. Baltimore Jr., CEO of Park Hotels & Resorts, which owns the two hotels.
Homicides in San Fransisco have increased nearly 40 percent from 2020 to 2022 and deaths from fentanyl have spiked.
The hotels follow a long line of businesses that have chosen to flee. Old Navy announced in May it will close its flagship store. Whole Foods and Nordstrom have shuttered businesses in the city over safety concerns. The latter's exit is costing the city 380 jobs. The downtown area of the city has lost half of its businesses since the start of the pandemic.
Democratic mayor London Breed and several city officials held an outdoor meeting on crime in May in the city's United Nations Plaza, known for drug use and crime. A crowd of spectators screamed insults and booed the officials, and one of them threw a brick that almost hit a child, local outlet KRON4 reported. The city officials adjourned the meeting amid the disruption and continued it from inside the city hall building.