SAN FRANCISCO (KRON) — In another apparent blow to San Francisco’s struggling downtown, the investment firm that owns two of the city’s major hotels announced it would cease paying the loans and surrender the properties to the bank. Payments toward the $725 million non-recourse loan ceased in June, according to a news release from Park Hotels & Resorts Inc., which operates the Hilton San Francisco Union Square and the Parc 55 San Francisco.
The hotelier, which operates 46 properties across the country, cited now familiar reasons for surrendering the properties.
“Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges — both old and new,” the press release read. “Record high vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future.”
“Unfortunately, the continued burden on our operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets,” the release also said.
“The Hilton Union Square and the Parc 55 are open for business and will stay open for business. They are more vital than ever as we approach the summer high tourist season with a continuing increase in inbound visitors,” Alex Bastian, president and CEO of the Hotel Council of San Francisco told KRON4. “It is not uncommon for hotel ownership to change. While the timing of this may appear less than ideal, we fully expect new ownership to come forth.”
The announcement that the hotelier would be surrendering the properties to the bank and removing them from its portfolio is the latest setback for the city’s downtown. The Hilton has 1,921 rooms, while the Parc has 1,024 rooms. Already, downtown SF has seen a string of retail closures, the most high-profile being the Nordstrom flagship store at Westfield San Francisco Centre.