To get a glimpse of San Francisco’s hotel woes 18 months after travel was shut down by the pandemic, consider just one statistic: At $ 92 a night, rates are down nearly 60% – a record drop in revenue per room. available in the United States.

The Bay Area is also tied with Oahu for the biggest drop in hotel occupancy since October 2019, according to data from CoStar subsidiary STR. Just over half of its hotel rooms were occupied at the end of October, a drop of 40% from before Covid.

“San Francisco was a very successful market so it had to go down further,” said Emmy Hise, CoStar’s director of hotel analysis for the western United States. “But even in terms of absolute values, this is one of the hardest hit markets.”

The city has failed to make steady progress in entertainment, conventions and group sales since the start of the pandemic, Hise said. Of particular concern are business and international travelers, who typically pay the highest hotel rates.

Foreign visitors have fallen nearly 75% since 2019, when they accounted for more than 28% of overnight visitors and more than 60% of all overnight visitor spending, according to the San Francisco Travel Association.

Business travel has been hampered by a Delta-related delay in returning to offices and changing local regulations regarding large group gatherings. In 2020, groups only booked a tenth of the record 1.2 million convention-related nights of 2019, and this year there are expected to be 50,000 additional nights below that figure. City-wide convention cancellations in those two years represent a loss of $ 1 billion in direct spending, according to SF Travel.

If there is a silver lining, maybe it is that the city is trying to convert more hotels into permanent supportive housing. Taking advantage of a state program called Project Homekey, he asked hotels that hosted homeless people during the pandemic if they wanted to sell. Many, but not all, have accepted their offer and others are likely to be converted in the near future.

Local government interest in purchasing hotels is an “emerging trend” across the western United States, where construction barriers are high, preventing newcomers from entering the San market. Francisco, Hise said.

Another potential sign of optimism: Some of the city’s biggest hotel owners have made a “smart game” by selling some properties this year to pay off the debt of others and maintain a presence in the area, he said. she declared. Behind the scenes, some owners are giving up a percentage of their equity to cover their debts rather than selling the entire hotel, she said.

Others completely give up their properties. Pebblebrook Hotel Trust, one of San Francisco’s largest hotel owners, sold the historic Sir Francis Drake Hotel for $ 158 million in April to Northview Hotel Group. In September, he struck an $ 87.5 million deal to sell the four-star Villa Florence in Union Square to AWH Partners. Each transaction attracted buyers to the San Francisco hotel market for the first time.

Pebblebrook CEO Jon Bortz said the Maryland-based REIT would “likely sell a few more” of its remaining 10 hotels in San Francisco and “reallocate that capital to markets that we believe offer a more risk-reward opportunity. attractive, ”according to the San Francisco Business Times. Bortz also said that “betting against San Francisco in the long run would be a mistake.”

As PPP loans and other federal aid come to an end, Hise said she wouldn’t be surprised to see struggling hotel sales. Longer term, it is bullish.

“San Francisco is the only market that’s really going from the top to the bottom,” she said. “But I really think the city is going to recover and I think a lot of other people too.”