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Tipsheet

San Francisco Leaders Get a Wake-Up Call Days After Ad Campaign Runs Trying to Lure Tourists Back

The investment firm that owns two of San Francisco’s largest hotels—Hilton San Francisco Union Square and Parc 55—announced it is ceasing payments on a $725 million loan, surrendering them to its lender.

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The firm cited “concerns over street conditions” as one of the reasons it’s dumping the hotels from its portfolio.  

“This past week we made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan,” Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer of Park, said in a statement. “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 and will likely significantly reduce compression in the city for the foreseeable future. Unfortunately, the continued burden on our operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets.”

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With 1,921 rooms, the Hilton San Francisco Union Square is the largest hotel in the city, while Parc 55 is the fourth largest, with 1,024 rooms. 

San Francisco Mayor London Breed confirmed in a statement that the hotels will continue to operate. 

 "These kinds of ownerships changes do happen, but these hotels will remain open and operating and the workers will continue to be employed. Still, we know there is a lot of work ahead of us and we will continue to focus on our economic recovery. That starts with fully funding my budget to build back police staffing and expand street cleaning, changing our business taxes to help stabilize existing businesses and recruit new ones, and aggressively implementing my Roadmap to Downtown San Francisco's Future."

The announcement comes just days after the San Francisco Travel Association launched a multi-million ad campaign to bring tourists back to the city. 

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