Two of S.F.’s biggest hotels reportedly lose $1 billion in value after owner exits

The two hotels were valued at $553.8 million by Kroll Bond Rating Agency, down from $1.56 billion in 2016, according to real estate data firm Trepp.

Last year, owner Park Hotels & Resorts gave up the 1,921-room Hilton Union Square at 333 O’Farrell St., the city’s largest hotel by room count; and the 1,024-room Parc 55 at 55 Cyril Magnin St., the fourth largest. Park Hotels said the city’s tourism recovery from pandemic-related challenges could take until 2030 and it was no longer worth paying the hotels’ $725 million mortgage.

Real estate brokerage Eastdil Secured has now been hired to sell the hotels with a deadline of Sept. 1, the San Francisco Business Times first reported. If no sale occurs, the hotels will move to a non-judicial foreclosure.

Between March 2023 and March 2024, Hilton Union Square had only a 53% occupancy rate and an average daily room rate of $251.26, while Parc 55 had a 50.9% occupancy rate and a $246.94 daily average room rate, according to bondholder reports.

Those occupancy figures are worse than San Francisco’s overall hotel occupancy rate, which ranged from 55% to 70%, according to seasonally adjusted data from data firm STR.

Tourism figures improved last year. But Moscone Center convention bookings are weaker this year, a particularly bad sign for big hotels like Hilton Union Square and Parc 55, which are highly dependent on business travelers and group bookings.

Other San Francisco hotels have also suffered. The Club Quarters Hotel at 424 Clay St. lost $40 million, or a quarter, of its value, according to a recent appraisal.

The owner of the 544-room Hilton Financial District at 750 Kearny St. defaulted on a $97 million loan in January.

A few blocks from Parc 55, the former Westfield San Francisco Centre mall is also in default, and reportedly lost $910 million in value between 2016 and 2023, though seven new leases have been signed.

By Roland Li,Business Reporter