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)
Congrats California on electing wacko radicals that have enabled the anarchy that is now San Fran. Reap what you sow.
Perfect, more space to house the “homeless”, i.e. bums.
I’m from Sydney. First went there 1979, then 1985, 1997, 1999, 2005. AlwYs loved the place. But then noticed more homeless people. A couple more trips over the last ten years and the love affair is over. Homeless, drug use, crime. Fisherman’s wharf a shadow from its hey days. Well done Gavin newsome and the democrats
One line in the article says Chase recently took over First Republic. Was this loan made by First Republic?
You conveniently forgot to mention the radical left wing Socialists running CA and the city of San Francisco. The sooner these people are held to account and locked away for many years, tourism and business will return. But you forgot to mention that. Instead you claimed Covid. BS, get fair dinkum’ mate.
This can’t be true. I just watched an SF tourism commercial that says SF is wonderful
Dream on robbo. You see anyone in Venezuela being held accountable for what the left did there, or anywhere else for that matter? You’re right but it never happens.
“Will this be a wakeup call?”
No.
San Francisco is the greatest city in North America. The city is maligned unfairly by MAGA Republicans who have never visited and who know the city only through prejudiced news reporting. San Francisco is a beautiful place. The weather is temperate year round. The people are kind, educated, and cultured. PoC and LGBTQIA+ are accepted. We have cuisines from all over the world and fresh local produce and great local wine. San Francisco is a place where we believe in science and the University of California, San Francisco pioneers groundbreaking and lifesaving medical research. (Across the bridge in Berkeley or down the peninsula at Stanford is where amazing research happens in all other fields.) San Francisco is a place where Black Lives Matter. San Francisco is a place where we Stop Asian Hate. San Francisco is a place with an easy to navigate international airport, less than half an hour from the city center, connected directly to public rail transit, and host to both an Amex Centurion and UA Polaris lounge — the frequent traveler’s marker of a city in high demand by people of high socioeconomic status.
Hotels and businesses come and go. San Francisco will be great forever.
San Francisco is such a dump. I mean it’s post apocalypse up there. Everyone should get out. It was violent and zombies ten years ago. Now it’s hitting the inevitable economic bottom from when your tech bro daddy dumps you.
Wake up call? Ha, that’s a good one, Gary!
SF isn’t going to turn around any time soon; if anything, the ‘leaders’ will lean further into their devoid-of-all-logic policies and point the finger every other direction than themselves. They’ve solely created this mess, further allowed it to thrive, and continue to double down on doing everything possible to prevent any sort of improvement.
So, two days ago Hilton was the worst hotel brand of all (in your blog) and now they are brilliant strategists because they abandon their billon dollar obligations. Just sounds like the same arrogant behavior with a different target, and with fewer hotels the real losers will be travelers. Every city goes through up and down periods, but San Francisco is still a prime convention, tourist, and innovation center. Hope an honorable and responsible company remakes this property.
Youngblood is the village idiot.
Youngblood works for the Travel Board or the Chamber of Commerce. Of course, it could just be that he’s a master of sarcasm. Either way, it made for a good “belly laugh”.
This is GREAT!!
Jamie Diamon can now set up this place as a Jeffery Epstein 1921 room business.
@Youngblood. Nothing to do with MAGA. All to do with left wing radical government and the lack of any common sense. Laws that effectively allow people to go into a store and steal for instance. Well you get the government you deserve. Enjoy!
These are financial issues that have a lot to do with Covid fallout and economics and not much about shocking changes in governmental policies. It feels like you’re stretching on this one to take cheap shots.
I treasure the time I spent living in the SF Bay Area but those will be fond memories of a place that no longer exists. Will the last person with a legitimate source of private income to leave please turn out the lights?
Increasingly expensive, increasingly dangerous, all we need is the big earthquake and we have Escape from San Francisco and ship all the convicts there – not like they’d be bothered by law enforcement anyway.
Glad we are sending most of the trash to florida and texas. Now san francisco can go back to the wonderful place it was before Musk, Thiel and other selfish jerks dragged it down.
@Christian- travel has recovered nationally, in-office has not, and high interest rates are bad for real estate. But those factors affect cities everywhere. The relevant issue is what is different here and that is not a cheap shot. It is what the hotel owner points to.
Youngblood : Frisco is a dump. Last time I came in by sea and went to J town I had to walk around several drunk/stoned bums sleeping on the street in broad daylight. The only civic pride that city has anymore is gay pride.
San Francisco is what the USA will be if the democrats keep winning. I know all the republican candidates suck so bad but I’ll take it over the radical left any day.
Responding specifically to Youngblood.
I’m not a MAGA republican. I am a Republican.
I remember visiting my cousin in SF since the 70’s. It was pretty nice as cities goes. Nicer than NYC and CHI at the time.
In the 00s I had a couple of conferences out there, and you could see the city struggling. I went back every other year through the 00’s and 10’s.
The plummet I witnessed was astonishing. Taking the BART was terrifying. Meth heads spitting everywhere. Fistfights in front of the conference hotel over homeless “territory”. Open drug use in the parks. Human feces EVERYEHERE. You could take a safe step. The last time I was there my cousin wouldn’t even leave her house to meet us for dinner after dark. And she’d lived there since she was 19.
The decision for me came when I was down at fisherman’s wharf, and a riot broke out near the Alcatraz boat. I dint know how many people were involved, but thebpolice there did nothing to ensure the safety of anyone, let alone try to break the riot up. This was in the afternoon.
What you say about CA and the SF area about having resources is true. Got great research, etc. But so does Iowa. Much better managed and much safer.
@Gary – I think you’re spot on with identifying the relevant issue. There are real estate owners holding on to worse financial prospects elsewhere, but they have more faith in future upside in those cities. The hotel owners aren’t in business to walk away from money – and this no confidence vote is very telling.
Democrats Destroy everything they touch. I’ll never go back to SanFranSchitHole.
As somebody who lives in SF, and has done for 25 years, yes, it is not nice in some parts, but that applies to all cities, anywhere. The comments here are r/wing ideology. Its an amazing city. What a joke this set of comments and article are. Puts this otherwise decent site to shame.
San Francisco has been in decline for a while, mired by bad municipal bureaucracy. That said, it’s pathetic to see the right-wing pile on in these comments. The polarized dysfunction is what’s paralyzing the US, and the only people who benefit from that are media moguls and politicians. Oh, and Xi and the CCP.
Let’s check out the top 5 most dangerous cities in the US:
1. St. Louis, Missouri. Violent crime rate: 1,927 per 100,000 inhabitants. …
2. Detroit, Michigan. Violent crime rate: 2,178.7 per 100,000 inhabitants. …
3. Baltimore, Maryland. …
4. Memphis, Tennessee. …
5. Little Rock, Arkansas. ..
That would be 3 on the “right”, 2 on the “left”. Same imbalance when it comes to teenage pregnancies, spousal abuse, etc. Holier than though isn’t so holy when it gets down to it.
“Socialism” is not the problem. Social capitalism is practiced in the Nordics, where they have free health care and education, an actual middle class, and much higher upward mobility than the US (AKA the American dream). The GOP has been bleeding the middle class to pass more tax cuts for the very wealthy.
Oh, and… California has the world’s 4th largest economy.
I am a gay man. My first trip to the city was in 2003. I loved it and went back 3-4 times a year. But the last few years, things started to change. The city went from liberal to radical. A couple of years before covid, the leftist lgbt’s decided the police didn’t belong in the parade, even though most gay men supported the cops. My last visit was 2019, things were getting really bad with crime, explosion in homeless, and radical trans activists. I have not been back, and do not plan on doing so anytime soon. Many other gays are on the same page. Until the city changes, i can only treasure the wonderful memories
this is great, Austin paid $8 mil to convert a hotel for homeless, SF can follow suit the great paradise coming on earth.
San Francisco is and will always be, one of the best cities in the world. Hilton, Marriott too, have been closing hotels across the world since the pandemic hit. They are facing massive financial hardships due to the drastic decline in travel. Closures are happening in red states too. Sf clearly has its problems, but please tell me again how it’s the policies of the left.
@zack I totally agree; you nailed it. The city has gone from Liberal meaning tolerant to Liberal meaning intolerant.
Congrats. San Franciscans got exactly what they voted for. Enjoy!
Wow, I had no idea that so many public policy and economics wonks read this blog! The nuanced discourse on solutions is … *chef’s kiss*
All the comments blaming this on Democrats are off base. The problems are rooted in the cultural and economic changes wrought by the tech boom of the last 10-15 years.
Housing prices skyrocketed, increasing the homeless problems and driving out small business. Now covid has sent the tech workers out of town, leaving vacancies behind, but prices have not yet responded by dropping. They should—and then the city will once again be a great home for artists.
Cities went into decline in the 50’s and 60’s. We may be seeing this happen again, but for different reasons.
San Francisco is not the Bay Area. SF. is a super small place/city population. True it’s vacated because people are not going back to the office. People don’t want to commute when they don’t have to- it’s a lifestyle changer for the better. This is the big problem for San Francisco. As far as homeless, cities are sending them here- that’s cheating. I don’t live in the city, I just enjoy the skyline view. . Here in my Bay Area, the climate and things to do in nature makes it heaven.
I welcome you haters to leave. Thank God I don’t live in prosperous Florida where books are being banned, discrimination being tolerated, women losing rights over their body. Yikes. Sure, San Francisco’s crime is trying to do the right thing and sometimes it doesn’t work. I can live with that. The rest of the country is acting like the Taliban – scary stuff! .
People like Youngblood proves it will take more pain for these poor souls to wake up and change trajectories. If Youngblood truly believes what they say they are truly brainwashed. SF WAS a great city, loved visiting there, a bit liberal for my taste but quirky, fun and refreshing. It’s now dangerous, dirty, and a shadow of its former self solely by the policies of the radical liberal politicians.
Thank you Youngblood for your wonderful well said post.I’ll add to your list of great scenic beauty .And decades of exceptional culinary inspiration that still lives on
Who wants to stay at either of those two crappy Hilton’s.I’ve been to both when things were good and they were inferior to other hotels.Hopefully new owners will make them good properties treating guests well.
SF def has it’s problems perhaps a bit more than other cities right now
hopefully solutions will be found I still prefer to visit there over many others even while atm it’s a bit rough around the edges
I live in SF. Gang members that have threatened to kill me get released by police without jail time back into the community. They still walk around doing whatever they want here. If you come to San Francisco, stay safe.
“Will this be a wakeup call?”
For whom, exactly? A borrower stopping payments will be a wakeup call for in office workers? For the police to clean up the streets? For conventioneers to return to the city? For other companies to ditch their assets too? I think it’s amusing that you’d ask that question without having aimed your thought first. I also think it’s adjusting that you think that a company ditching assets would cause anything to change. Absolutely nothing will change because of this action, it’ll take a huge number of other companies doing the same thing to start a panic. But if that happened some shrewd investment groups would buy it all up at a huge discount. Someone with your financial background should understand this.
@ Youngblood is correct. The current mess will improve, and San Francisco will continue to be an awesome city. It will not happen overnight. I hope the housing prices drop 50%, so we can afford to buy a house there and move there to live in the best weather in the USA. Hint: it ain’t gonna happen. Certain groups like to paint SF as the worst place on earth, but if it so horrific, why are people still paying $1,000+ per sq ft for houses?
San Francisco had so much promise. San Francisco had so many advantages. For many years, that was enough to offset poor management of the city but that cannot go on forever.
America is like that. So many advantages but run the country poorly or inefficiently and eventually it will catch up with you.
Look at taxi fare. They are high in America. In some countries, the cost of gas and the cost of a car is about the same but the lower labor costs results in affordable taxi fares. If taxi fares are affordable, people can depend on public transit and, occasionally, taxis. In the US, with taxis so expensive, one has to own a car.
Finally, a company that is leaving a city because of how bad the conditions are, and actually says it. Not like Walgreens or CVS when they close a location because they are being robbed out of existence, but give a watered-down reason like they’re adjusting to market conditions or some such nonsense. Crime is up and quality of life is down. What a disaster. Do normal people really look at this and say, “gee, I wonder why this is happening?”
Yeah, they bet big and over stretched in a transitional part of town.
Yeah, the major of San Francisco is doing a terrible job with the drugs and homeless crisis.
It’s not just an SF issue, but she is not making the situation better.
Most of the homeless in San Francisco or in California for that matter are from shit-hole red states for reasons we all know: less police brutality against victims of Capitalism, fair weather to camp outside, and more social services for the homeless including veterans (more than 10% of the homeless are veterans used up and spit out by the system).
Having said all that, it’s important to remember that homelessness is a complex issue influenced by various factors, and people may migrate to different cities or states due to economic, social, or personal reasons. Major reasons for homelessness in the US are: lack of affordable housing, poverty & unemployment, mental illness and substance abuse, domestic violence, lack of supportive network, etc. While it’s estimated that the homelessness issue can be fixed with an investment of $20 billions per annum, our politicians has chosen to give multiples of this amount to the military/industrial complex to continue a winless war. I guess the homeless have no lobbyists in DC!
The last Republican mayor of San Francisco left office in 1964.
Reap what you sow San Francisco: sh!thole of the West Coast.
The only wake up call will be when the left-wing comes to the realization that all this ‘compassion’ and these social-engineered programs to ‘help’ the homeless only make the problem far worse, as they do nothing but harm the population they’re targeting to help. It’s an endless black hole money pit that gives the appearance of leaders looking like they are doing something, when really San Fran shows case in point what the outcome will be if leaders don’t come to their senses and stop writing check after check.
Rather than understanding the root causes of San Francisco’s current state, everyone loves to point fingers and blame the liberals. In reality, San Francisco, like many boom towns, was a victim of it’s own success, ultimately pricing itself out of competitiveness. It’s the first digital Detroit. It boomed, and now it’s busted. It’s happened in cities across America, both blue and red.
There is no reason to doubt their explanation for leaving S.F. : “ 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.”
Nothing about homelessness or mismanagement or ineptitude. Just flat out facts.
Shelters prohibit drug and alcohol use. Some people find that deal unacceptable.
If you want to live cheaply outdoors so you can spend what little money you have on intoxicants, you will naturally go where the weather and the free services are best. Anyone would. SF can’t reduce its population of street residents without cutting back on the services it provides them, which would be seen as inhumane. This will remain a conundrum until the public realizes that enabling people to overdose and die on the streets is not in the end the most humane policy. There are no simple or harm-free solutions. I don’t envy the city leaders now that they are in this position.