San Francisco

Owner of San Francisco's largest hotels not paying property loan, plans to exit the city

NBC Universal, Inc.

The owner of two of San Francisco's biggest hotels will stop making payments on a massive loan it has on the properties, and because of conditions of the city, it plans to make an exit.

The San Francisco Hilton Union Square is the city's biggest hotel. With 1,921 rooms, it takes up an entire city block. Not far away from it, the Parc 55 has just over 1,000 rooms.

The chairman and CEO of Park Hotels and Resorts, Thomas J. Baltimore Jr., said it will walk away from a loan on both properties for just under three quarters of a billion dollars.   

He's quoted in a lengthy prepared statement that reads in part, "We believe San Francisco's path to recovery remains clouded and elongated by major challenges -- both old and new."

Among the main concerns listed by the chairman is a weaker-than-expected return of conventions to San Francisco over the next four years. He also says issues like street conditions, record high office vacancies and an overall slow pandemic recovery, when compared to other major cities, are all factors in the company's decision to leave San Francisco.  

Jeff Belisario, of the Bay Area Counsel, said this has become a recurring issue for the city.

“This is kind of part of the devaluation of San Francisco in our mind, whether it's the commercial office real estate, hotels a little bit," he said.

City leaders have tried to blunt the growing reports of retailers leaving town, saying in many cases it's partially due to an overall trend toward shopping online.

They've said the city's record office vacancy rate is due, in part, to the rise of remote work. Both are trends that city leaders say are beyond their control.

But the perception of crime, open air drug use, and homelessness, is something they're continuing to combat.

Many visitors say the streets are a shock.

“I didn't know that you have, well I knew about it but, the homelessness is such a big problem here,” said Nives Stalver, visiting from Switzerland.

Tourists also said they were surprised to see open drug use and the large number of people experiencing mental health issues in the streets.

But many also said they would return if they heard the city had improved.

NBC Bay Area reached out to members of the board of supervisors and the head of the San Francisco Travel Association, but were not available for comment. 

Belisario said there are signs of a possible recovery at some point, if city leaders can effectively change perceptions about the safety of the city.

“There are those rainbows on the horizon. Potentially, as you think about AI, you think about biotech, you think about some of these new industries,” said Belisario. “You still think about the tech community here in San Francisco. There are opportunities to build that back up. There's more space for companies that maybe couldn't be here three or four years ago.”

Belisario also said both hotels will likely continue operating but will have to do so with different owners.

In a statement to NBC Bay Area, a Hilton Hotel spokesperson for Hilton San Francisco Union Square and Parc 55 San Francisco, said:

"Hilton San Francisco Union Square and Parc 55 San Francisco – a Hilton Hotel remain open and operational. Hilton continues to manage these two properties under the Hilton Hotels & Resorts flag and has no plans to discontinue operating the hotels. We remain fully committed to welcoming guests with the quality service and hospitality experience they have come to enjoy. Any further questions should be directed to ownership."

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