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North America

San Francisco’s 2 Largest Hotels Lose More Than $1 Billion in Value

Alan Woinski and Kim Woinski
July 2nd, 2024 at 5:01 PM EDT

Skift Take

San Francisco’s two largest hotels have lost over $1 billion in value, now worth $553.8 million, prompting a downgrade in bond ratings and a rush to sell before foreclosure.

The DJIA was up 162, Nasdaq rose 149 points, the S&P 500 was up 34 and the 10 year treasury yield was down .04 to 4.44%. While lodging stocks did better than yesterday, they still did not keep up with the rising indexes and wound up mixed on the day.  

Hilton has been approved to build a new four-story hotel in Escambia County, Florida, which will mark the local debut of its new extended-stay hotels brand. Hilton was approved to build a new hotel with over 58,000 square feet of space and 121 rooms. The hotel, called LivSmart Studios by Hilton, will be located on Plantation Road and University Office Boulevard in Pensacola.  

The Hampton Inn by Hilton in Bridgeport, West Virginia held a ribbon-cutting ceremony marking the completion of a year-long, $4.5 million renovation. Each floor of the hotel received cosmetic changes from carpets to furniture. The indoor pool area has new flooring and the fitness center was expanded with all new equipment. 

A pair of investment firms have injected $35 million into a 350-key hotel in Chicago, Illinois to stave off foreclosure. 1907 Capital and Crestline Investors took a leading equity stake in the dual-band Canopy by Hilton and Hilton Garden Inn on West Jackson Boulevard. The investment helped pay off a $100.5 million mortgage originally taken by a venture of Phoenix Development Partners and Green Door Capital Investment, which spent $148 million to convert the historic 14-story building into a hotel. Phoenix and Green Door had been seeking new equity to settle their debt, as their lender, a venture of Goldman Sachs, threatened to foreclose on the property. 1907 and Crestline saw potential in the dual-brand Hilton hotel and stepped in to rescue Phoenix and Green Door1907 and Crestline took out a $65 million mortgage from Citigroup to finalize the recapitalization. Despite the equity shift, Phoenix and Green Door remain partners in the hotel’s ownership.   

New research estimates San Francisco’s two largest hotels have lost more than $1 billion in value as the city’s hotel market recovery continues to lag the rest of the country. The nearly 3,000-room hotel complex consisting of the Hilton San Francisco Union Square and Parc 55 hotels were valued at just $553.8 million by Kroll Bond Rating Agency, representing a 65% drop from the hotels’ 2016 appraisal of $1.56 billion that underpinned a $725 million mortgage from then-owner Park Hotels & Resorts. Last week, Moody’s Investors Service downgraded each of the deal’s bond classes. The original class A bonds were downgraded to Baa1. Bondholder reports also reveal Eastdil Secured has been tapped by the loan’s special servicer, Wells Fargo Bank, to sell both properties: the 1,919-room Hilton San Francisco Union Square and the 1,024-room Hilton Parc 55Eastdil Secured signed a listing agreement in late April and began preparing an offering memorandum. Per the terms of receivership, the receiver has until Sept. 1 to find an adequate buyer for both properties, or the properties will go into no judicial foreclosure.   

Certares Management LLC has acquired the Courtyard San Diego Downtown. The hotel is a recently renovated lifestyle Marriott asset located in Downtown San Diego, California. The 245-room historic hotel marks the first hotel acquisition with HHM, who has operated the hotel for over a decade.   

Downtown Mankato, Minnesota might be getting two new hotels built, adding over 280 rooms to the city’s lodging capacity. The developer, known as Hotel Mankato LLC, plans to seek City Council approvals in August for a four-story, 126-room Element by Westin and a 10-story, 156-key AC by Marriott. The two hotels will share a development site where the Landmark Center and City Center Hotelcurrently stand. Currently, the project is described as a 250,000-square-foot development with a 168-stall underground parking garage. The hotels would also share a pool, fitness center and lounge spaces. Plans also mention space for a future coffee shop at the main level and a third-party restaurant with rooftop patio space on the 10th story.  

IHG Hotels & Resorts announced the opening of a new Staybridge Suites hotel in Manteca, California. The new hotel offers more than 910 square feet of meeting space. Staybridge Suites Manteca is owned and operated by Nor Cal Hospitality Solutions Inc.   

SH Hotels & Resorts announced plans to unveil 1 Hotel & Homes San Miguel de Allende. Set to open in 2027 in the heart of historic Mexico, just minutes away from the vibrant city center of San Miguel de Allende1 Hotel & Homes San Miguel de Allende will feature approximately 97 keys and 48 residences, extensive culinary offerings and outdoor event space.  

Disney Vacation Club has officially welcomed its first guests to the newly designed cabins at Disney’s Fort Wilderness Resort in Lake Buena Vista, FloridaThe Cabins at Disney’s Fort Wilderness Resort will open in phases throughout the year and eventually consist of more than 350 new cabins. The cabins are a part of a collection of improvement projects underway at the resort.   

The historic Bell Building in Athens, Georgia, is undergoing renovations to become an exclusive boutique hotel. Built in 1916, the Bell Hotel will feature 12 elegantly appointed rooms upon completion of renovations and enhancements later this year. The project is owned by the Foster Family, who purchased the property in 2022. The hotel will offer a new rooftop terrace, an intimate bar in the reception area as well as versatile private event offerings. The grand opening of the Bell Hotel is currently on track for Fall 2024.   

A new developer announced his intention to move forward with the long-delayed Talus La Quinta resort development. Christopher M. George, founder of CMG Financial, a mortgage bank, announced he has exercised his rights to proceed under the terms of last month’s Memorandum of Understanding and Agreement with the City of La Quinta, California and other involved parties. The move will give George additional time to conduct a thorough investigation into the viability of documenting and advancing the long-delayed Talus project. Talus La Quinta is a resort destination that is planned to include two hotels, single-family homes, condominiums, a golf clubhouse, a conference center and a luxury spa. The project, initially known as the SilverRock Resort, was first envisioned in 2002. It has faced numerous delays, and in September 2022, construction on the project came to a halt.   

Europe Highlight

Radisson Hotel Group announced the opening of Radisson Blu Hotel Sheffield in Sheffield, UK. The hotel offers 154 guestrooms, a rooftop speakeasy-style Indian restaurant concept and bar, six flexible meeting and event spaces with an outdoor terrace and a fitness center.

Hotel and Lodging Performance

Daily Lodging Report subscribers get full access to insights from ST200 as part of their subscription.

The Skift Travel 200, a tool from Skift Research, makes it easy to track travel industry performance as a whole, as well as within specific sectors. The Accommodations sector includes public companies in these sub-sectors: 

  • Global Hotel Brands
  • Hotel Management and Operations
  • Hotel REITs
  • Regional Hotel Brands
  • Time Shares
  • Alternate Accommodations
Alan Woinski and Kim Woinski
July 2nd, 2024 at 5:01 PM EDT

Companies: 1 Hotels, AC Hotels by Marriott, Canopy by Hilton, Certares, Courtyard by Marriott, Crestline Investors, Disney Parks, Eastdil Secured, Element, Hampton by Hilton, HHM Hospitality, Hilton, Hilton Garden Inn, Hilton Hotels & Resorts, La Quinta, LivSmart Studios, Park Hotels and Resorts Inc., Radisson Blu, Radisson Hotel Group, SH Hotels & Resorts, Staybridge Suites

Locations: California, England, Georgia, Mexico, Minnesota, Palm Springs, Phoenix, San Francisco, West Virginia

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