The San Francisco hotel market is recovering

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Terry Lewis of 55 Park and 55 Cyril Magnin St, San Francisco (Roland Li/The Chronicle, LinkedIn)

Hotels in San Francisco, a major driver of the city’s economy, have come back to life after running out of gas during the pandemic.

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

The rebound follows a 60% drop in rates – the largest in the country – to an average of $92 per night last year. Occupancy in April was nearly double the occupancy rate of 35.5% a year earlier, although it still lagged the 2019 record of 82.9%.

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

The downside: China, San Francisco’s top market for tourists before the pandemic, has banned non-essential travel abroad; and soaring gas prices could discourage local travellers. Another Covid surge could also dampen hotel demand.

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

The reopening of Parc 55 “is perfectly timed to meet the steady increase in demand and occupancy that we are seeing as summer approaches,” said Terry Lewis, general manager of the Hilton hotel, in a press release. “This is just the latest sign of San Francisco’s resilience over the past two years.”

Hotel demand rose 118% in the first quarter, compared to the same period last year, although it was only half of 2019 levels, according to the newspaper.

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

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 spent.

During the second quarter this summer, 72,500 conference visitors 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 the June Pride Parade and the San Francisco Jazz Festival are expected to boost visitor numbers.

International travelers are a key source of revenue in San Francisco, accounting for just 11% of overnight visitors last year, but 44% of all spending by overnight visitors, according to San Francisco Travel, the travel agency of the city.

Excluding China, the main sources of international tourists in 2021 were Mexico, India, Canada, the Netherlands and Taiwan.

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

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

[San Francisco Chronicle] – Dana Barthelemy

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