Park Hotels & Resorts, the operator of two of San Francisco’s most prominent hotels, is turning over the keys to the properties – essentially giving up on a city that has fallen on hard times.
Park Hotel stopped paying a $725 million loan to the Hilton Union Square and Parc 55, the real estate investment company said Monday. A few blocks from the once bustling Moscone Center conference venue, the hotels have a total of nearly 3,000 rooms.
A slowing economy and a thunderclap for remote working has drained offices across the country, with some warning of a ticking bomb in the commercial real estate market. Downtown San Francisco has been hit hard by a wave of tech industry layoffs and a sharp slowdown in Moscone’s conference calendar.
“More than ever, we believe San Francisco’s road to recovery remains clouded and extended by major challenges” that will reduce demand for business and leisure travel, said Thomas J. Baltimore Jr., the CEO of Park Hotels & Resorts.
The company previously warned investors it was weighing options for the loan and told analysts last month that the properties contributed only a small amount to its 2023 outlook.
The Park Hotels & Resorts share rose more than 2 percent on Tuesday. The company’s portfolio of 46 properties includes Hiltons in Chicago, Honolulu, Midtown Manhattan and San Diego.
Due to the abrupt departure of Park Hotels & Resorts, it is feared that others may follow this example. San Francisco relies heavily on business travel, which has not yet returned to prepandemic levels. JPMorgan Chase brought back its annual healthcare conference this year, but other events have been moved, including VMWare’s technical conference.
Not everyone gives up. “We’re not writing off San Francisco,” James Risoleo, the CEO of Host Hotels & Resorts, the parent company of the Marriott Marquis San Francisco, told analysts in May.
“I’m concerned about how the market is performing relative to 2019 and what’s happened with the layoffs in the tech world and things like that, and the return to office in that market is really lagging behind the rest of the country,” he said. he. “But it is the center of technology and it will become the center of artificial intelligence when the world returns.”
