San Francisco Is A Mess, And The Owner Of The City’s Largest Hotel Is Just Walking Away

The owner of the Hilton San Francisco Union Square and Parc 55 hotels in has chosen to stop making payments on $725 million in debt and turn the keys over to their lender, J.P. Morgan Chase.

Park Hotels and Resorts says San Francisco is too much of a mess and won’t be turned around any time soon. According to the ownership group’s CEO,

After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market.

Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges, both old and new: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand.

The Hilton San Francisco Union Square is the city’s largest hotel with 1,921 rooms, and Parc 55 has 1,024 rooms. In 2016 the hotels were appraised for a combined $1.56 billion. The owner is turning over the keys even though they owe less than half that, showing just how far the value of San Francisco properties has fallen. They couldn’t sell the hotels, and couldn’t make the economics work even with the smaller debt load.

The properties remain open for business, but the decision underscores the struggles that San Francisco is going through. In some ways it’s been poorly governed for a century, though many of its problems are far newer. The pandemic made it vulnerable to these problems – people left (whether for LA or other states), and the reason to stay in San Francisco was because of the other people who there there. Work from home and work from anywhere increasingly meant being in San Francisco was no longer the exclusive path to success in tech and adjacent industries. Park Hotels had made a big bet on the city, and now they’re walking away too.

Will this be a wakeup call?

(HT: @DSvor)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I really have to laugh at all the political comments here, especially from the liberals. Ya’ll blamed TRUMP for everything, before that it was Republicans in the Senate/House during Obama, before that it was Bush. So you need to just take the heat from everyone who is blaming the democrats/red voters for this – since we are very much so in a left vs right momentum right now. And its absolutely aweful.

    But I just watched the left chastize Trump for every tiny little thing for 4 years (actually I think its still going on), and totally IGNORE Biden doing the same stuff, or they blame Republicans for it.

    I think its time I change my voter registration from Libertarian to Democrat so I can push blame on anyone but me and my party, it must be wonderful to be a part of a left wing movement & party that is 100% pure, 100% perfect, and 100% for the people. Like, in California. Because California is such a welcome, growing corporate environment. At least, that’s what their Governor is telling everyone.

  2. I have no Sympathy for these Greedy hotels who charge for everything. They post their prices to lure you in and then want a Ride resort fee when you arrive. For what they’re not including breakfast or most don’t have a pool or gym. SO WHERE ARE THE RESORT AMENITIES?

  3. Nonsense in these comments. It’s a great place to live, and it has the same problems every big, first tier city has. Yes, it’s expensive. Get over it. My in laws assure me it has been at least since 1950. I moved here in 1987.

    I have no worries about meeting friends and guests at the Hilton or Parc 55. We simply avoid those few neighborhoods the news labels as dangerous, just as anyone smart does in any city. People here are friendly, intelligent and welcoming.

    Last month I ate at Ethiopian, Eritrean, Japanese, Italian, Burmese, Szechuan, Greek, middle eastern and Indian restaurants, besides the usual steak, Mexican, California and fresh fish places. Can you do this within a few minutes’ drive?

    I visited two National Recreation Areas and a National Park last month and drove down for a night to Big Sur. We went up to wine taste in Napa, and went shopping in Berkeley, Union Sq, Palo Alto and Mill Valley. We listened to music at several of the restaurants above during our meal. We attended two concerts (one rock, one classical) and a street fair on different days. This just is NOT the hellhole Rush, fellow right wingers and your idiot news portray.

    Real residents wouldn’t live elsewhere— it’s that dynamic and fun. My business does well.

    You ought to take the naysayers with a whole cup of doubt, and recognize that while the problems of big cities are not absent here, our town is mighty positive for many of us, and I’m sorry it’s expensive and become a punching bag for our political enemies. Feel free to come join us in the fun— or not, if you believe them, and we’ll probably BOTH be better off.

  4. Those who think everything is fine because they are having so much fun enjoying the restaurants and attractions are missing the point. The city is losing jobs, cannot hire enough police, may have to greatly curtail public transportation, and has a huge budget deficit, all because people don’t want to live or work here and tax revenue is drying up. The city needs to work for everyone, not just the elites.

  5. 28 year resident of SF and social moderate and I love the city. But it’s a mess and a disgrace. True, the surrounding area is beautiful and engaging but downtown is a shit show and you know it. Dismissing that fact by listing restaurants you dined at last week while walking by 8000 homeless makes you look foolish.

  6. Funny how emotionally bankrupt, delusional, deranged triggered, snobby, far left liberal neo-Marxists deflect & defend their beloved, rotted San FranPsycho ran by all radical liberal neo-Marxists who enable all of this crime, destruction with businesses fleeing with zero accountability as they know the voters there are too stupid & the robot puppets will always submit & vote for them no matter what. Same goes for crime ridden Lost Angeles, nut job NYC, Killadelphia, Baltimore, Schitcago, Detroit, Minneapolis, Newark, D.C., Portland, Seattle. They are all crime ridden decayed liberal toilets. No wonder since 2020, nearly 800,000 hard working taxpaying Californians from all income levels have left the rusty overtaxed, crime ridden, neo-Marxist state & have taken their billions of tax dollars with them. They have been replaced with lazy leeches, homeless, drug addicts, mentally ill, criminals who are coddled & illegal aliens sucking off the system. Way to go San FranPsycho, all of that indoctrination & brainwashing thought control & rampant drug abuse since the 1960’s has really paid off for you. You reap what you sow. Like the old saying goes: If you are not a liberal by age 18 you don’t have a heart. If you are not a conservative by age 28 you don’t have a brain.

  7. It’s not going to get better in our lifetime. The city is for tourists but that might not hold out to be for much longer.

  8. Is this the content that qualifies you to be a “thought leader in travel”. Regurgitated Fox News talking points from a REIT that doesn’t pay its bills hardly seems like thought leadership.

  9. @Roger:

    You are correct, and I enjoyed your colorful language! Here are links to some reports by Stanford’s Hoover Institution as to what the limousine liberals are doing to SF and California. Maybe some serious financial and social pain is what they need:

  10. Wait, so it is ok for a company to not pay their debts in the millions, but $20k for student loans is a problem for the right wing. The condition of SF is not relevant to the fact that this company is violating the terms of their contract and they should be sued for the balance.
    I always hear how businesses take the risk so should reap the rewards. What risk did they take? They made millions when the convention business was booming and when things went bad they walked away. That is inexcusable.

  11. Sorry @Sean Randel, but who precisely is saying it for a company to walk away from it’s debts? If they walk, they lose the asset, which thanks to the sh!thole San Francisco has become after decades of Democrat rule, is worth hundreds of millions less.

    If you quit paying your student loan you don’t have to give back your degree.

    Your ignorance, while not surprising, is inexcusable (and always laughable).

    Glad I could help…

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