Park Hotels & Resorts, which operates two of San Francisco’s most prominent hotels, has turned over the keys to the property, essentially giving up on the troubled city.
Park Hotels suspends payments on $725 million loan related to Hilton Union Square and Park 55 real estate investment trust Said on monday. Together, these hotels are located a few blocks from the once-bustling Moscone Center conference center and have nearly 3,000 rooms.
The slowdown in the economy and the thunder of remote work have left offices across the country empty, with some warnings of a ticking time bomb. commercial real estate market. The technology industry is hit by a wave of layoffs, sharp deceleration According to Moscone’s conference calendar, downtown San Francisco has been hit hard.
“More than ever before, the road to San Francisco’s recovery will be challenged by major challenges that will reduce demand for business and leisure travel,” said Thomas J. Baltimore Jr., CEO of Park Hotels & Resorts. “I think it’s still cloudy and protracted,” he said.
The company has previously warned investors it is considering financing options, and told analysts last month that the properties would make a modest contribution to its 2023 outlook.
Shares of Park Hotels & Resorts rose nearly 3% in Tuesday afternoon trading. The company’s portfolio includes Chicago, Honolulu, Midtown Manhattan and the Hilton in San Diego, and includes 46 properties.
The sudden exit of Park Hotels & Resorts has raised fears that other companies will follow suit.San Francisco is High reliance on business travel, has not yet returned to pre-pandemic levels. JPMorgan Chase brought back its annual healthcare conference this year, but canceled other events, including VMware’s tech conference.
Not everyone is giving up. “We are not going out of business in San Francisco,” James Risoleo, chief executive of Host Hotels & Resorts, parent company of Marriott Marquis San Francisco, told analysts in May.
“I am concerned about how the market is doing compared to 2019 and what has happened with job cuts in the tech industry and elsewhere,” he said. We are very far behind,” he said. “But this is the hub of technology, and when the world returns, it will be the hub of artificial intelligence.”
