San Francisco hotel market perks up

More than two out of three rooms filled in April with average rate of $227, both pandemic highs

Parc 55's Terry Lewis and 55 Cyril Magnin St, San Francisco (Roland Li/The Chronicle, LinkedIn)
Parc 55's Terry Lewis and 55 Cyril Magnin St, San Francisco (Roland Li/The Chronicle, LinkedIn)

San Francisco hotels, a major engine of the city’s economy, have rumbled to life after running out of gas during the pandemic.

Hotel occupancy reached a pandemic high of 67.2 percent last month, with an average daily room rate of $226.59, another high, the San Francisco Chronicle reported, citing figures from the city’s tourism bureau.

The rebound follows a 60-percent drop in rates – the steepest in the nation – to an average $92 a night last year. Occupancy in April was nearly double the 35.5 percent occupancy a year earlier, although it still lags 2019’s record high of 82.9 percent.

The upside: leisure travel and business conferences are seeing a comeback, while closed, renovated and new hotels are reopening or opening their doors for the summer tourist season.

The downside: China, the top market for San Francisco tourists before the pandemic, has banned nonessential travel overseas; and soaring gas prices could discourage local travelers. Another Covid surge could also dampen hotel demand.

The 1,024-room Parc 55, the city’s last major hotel still closed by COVID, reopened last week. Three new and renovated hotels — 1 Hotel, Luma Hotel and Beacon Grand, formerly Sir Francis Drake — are set to open in June, with the Line SF set to open in late summer.

Parc 55’s reopening “is perfectly timed to meet the steady increase in demand and occupancy we’re seeing heading into summer,” Terry Lewis, general manager of the Hilton-operated hotel, said in a statement. “This is just the latest sign of San Francisco’s resilience over the last two years.”

Hotel demand was up 118 percent in the first quarter, compared to the same time last year, though it was only half the levels of 2019, according to the newspaper.

San Francisco International Airport expects 12 million passengers between Memorial Day and Labor Day, two-thirds the traffic prior to the pandemic.

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Total business and leisure tourism spending is expected to nearly double to $6.1 billion this year from $3.1 billion last year. The record year of 2019 saw $10.3 billion in spending.

During the second quarter this summer, 72,500 visitors at conferences in San Francisco are expected to spend $117.2 million. Major events include RIMS Riskworld and the return of the RSA Security Conference, which was the last major convention in March 2020 before shelter-in-place orders.

Summer events like June’s Pride Parade and the San Francisco Jazz Festival are expected to bolster visitor numbers.

International travelers are a key source of San Francisco revenue, accounting for only 11 percent of overnight visitors last year, but 44 percent of all overnight visitor spending, according to San Francisco Travel, the city’s travel bureau.

With China off the table, the biggest sources of international tourists in 2021 were Mexico, India, Canada, Netherlands and Taiwan.

The city’s reliance on international and corporate travel means it’s had one of the slowest recoveries in the country, said Joe D’Alessandro, CEO of San Francisco Travel. More leisure-focused destinations such as Miami and Las Vegas, which also had fewer health restrictions, have seen faster rebounds.

San Francisco Travel expects visitor volume and spending to fully recover by 2024.

[San Francisco Chronicle] – Dana Bartholomew

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