U.S. lodge markets recuperate from the pandemic; San Francisco an outlier

NEW YORK, June 16 (Reuters) – A snapshot of 15 major US hotel markets shows that city travel is back on the rise, with one notable exception: San Francisco.

Several hotel activity metrics, including average price per room, revenue per room and supply growth, show that most major cities have recovered from the worst of the pandemic. Some, including Miami, Florida and Austin, Texas, are seeing remarkable growth in both supply and sales.

However, San Francisco, a top 3 location in the decade before the pandemic, is struggling. There’s a decline in tech jobs, a slow return of Chinese travelers, less downtown traffic as more people work from home, and rising crime and homelessness that have tarnished the city’s image.

Data from hotel analytics firm STR shows that revenue per available room (RevPAR), a key performance metric, declined 30% for San Francisco in May 2023 compared to the same month in 2019. Daily room rates in May averaged $207.72, down 14% from $242.51 in May 2019.

Metrics like ADR and RevPAR are affected by seasonal trends, but San Francisco is taking longer to recover than other major cities.

Earlier this month, real estate investment trust Park Hotels & Resorts (PK.N) announced that it plans to remove two hotels in the city from its portfolio. Developer Unibail-Rodamco-Westfield (URW.PA) will hand over its Westfield San Francisco mall to lenders after 20 years as it struggles with declining customer visits.

Alex Bastian, CEO of the Hotel Council of San Francisco, said the recovery has been slow, partly due to the sluggish return of visitors from mainland China, the city’s largest tourist group before the pandemic.

European travel to the city is at 2019 levels and could even surpass it this year, Bastian added. “We are on the right path.”

Miami saw the strongest growth, with average daily rates and revenue per available room increasing 36% and 23%, respectively.

“Miami is in quite a seismic upswing when it comes to hospitality metrics,” said Scott Berman, board member of the Greater Miami and the Beaches Hotel Association. “I don’t know of any hotel operator who doesn’t want to be active in this market.”

Miami is “the poster child” for strong leisure and healthy business demand as companies move their headquarters to Florida, said Jan Freitag, national director for hospitality analytics at commercial real estate analytics firm CoStar Group.

San Francisco is an “unfortunate outlier” as businesses are still not returning to their offices and concerns about social issues are limiting business and leisure travel, Friday said.

“These two markets are essentially the most important storyline for the hotel industry post-pandemic.”

Reporting by Doyinsola Oladipo in New York; Edited by Richard Chang

Our standards: The Thomson Reuters Trust Principles.