San Francisco Struggles as Other US Hotel Markets Rebound from the Pandemic
As travel to major US cities begins to rebound, there is one exception that stands out: San Francisco.
Most major hotel markets across the country are experiencing a recovery in key metrics such as average room price, revenue per room, and supply growth. Cities like Miami, Florida, and Austin, Texas, are even witnessing notable growth in both supply and revenue.
However, San Francisco, which was one of the top three destinations prior to the pandemic, is facing challenges. The city is grappling with a decline in tech jobs, a slow return of Chinese travelers, reduced downtown traffic due to remote work, and increasing concerns over crime and homelessness, which have negatively impacted its reputation.
According to data from hotel analytics firm STR, San Francisco’s revenue per available room (RevPAR) was down 30% in May 2023 compared to the same month in 2019. The average daily room rates in May averaged $207.72, a 14% decrease from $242.51 in May 2019.
Recently, real estate investment trust Park Hotels & Resorts announced its plans to remove two hotels in San Francisco from its portfolio. In addition, Unibail-Rodamco-Westfield, the developer of Westfield San Francisco shopping mall, is transferring the property to lenders after two decades due to declining customer visits.
Alex Bastian, CEO of the Hotel Council of San Francisco, highlighted that the slow recovery can be attributed in part to the sluggish return of visitors from mainland China, the city’s largest tourist group before the pandemic. However, European travel to the city has reached or even exceeded 2019 levels, indicating a positive trend.
Meanwhile, Miami has emerged as a standout market, with average daily rates and revenue per available room experiencing a 36% and 23% increase, respectively.
“Miami has shown remarkable growth in hospitality metrics,” said Scott Berman, a board member of the Greater Miami and the Beaches Hotel Association. “It’s a market that every hospitality operator wants to be in.”
Jan Freitag, the national director for hospitality analytics at commercial real estate analytics firm CoStar Group, described Miami as the “poster child” for strong leisure and business demand, especially as more companies relocate their headquarters to Florida.
San Francisco’s struggles and Miami’s success serve as contrasting storylines within the hotel industry’s post-pandemic recovery.
