San Francisco Still Struggling with Hotel and Tourism Comeback

By Loura

San Francisco’s tourism revival faces an uphill battle due to lagging performance.

San Francisco, the bustling city recognised for its landmark attractions and various neighbourhoods, is still struggling to rebuild its hotel and tourist industries.

While many large U.S. cities have seen favourable development, San Francisco’s sluggish performance raises questions about the city’s potential to recover.

San Francisco Still Struggling with Hotel and Tourism Comeback

According to STR, a renowned hotel analytics organisation, June RevPAR (Revenue per Available Room) in the San Francisco market was down 19.6% from the same month last year.

Occupancy rates dropped by 6%, while the average day rate (ADR) dropped by 14.5%.

In striking contrast, other gateway cities such as New York, Chicago, and Los Angeles had good results. The RevPAR in New York increased by 7.5% in June, while Chicago increased by 6.5% and Los Angeles increased by 0.3%.

Emmy Hise, Senior Director of Hospitality Analytics at CoStar Group, STR’s parent business, said that the majority of U.S. metropolitan areas have had favourable hotel performance. Even when there were reductions, they were often minor. San Francisco, on the other hand, is one of the few markets whose ADR has not surpassed 2019 levels.

Factors Influencing San Francisco’s Slow Rebound

Several factors have contributed to San Francisco’s slow comeback. To begin with, the city is strongly reliant on the IT sector, which has been sluggish to restore pre-pandemic business travel patterns. Furthermore, the city’s conference sector has yet to completely recover, with around 300,000 rooms still unbooked in comparison to 2019 levels.

The slower-than-expected resumption of inbound foreign travel, notably from Asia, is another factor contributing to the extended recovery. China, formerly San Francisco’s most important overseas market, was one of the last major worldwide markets to reopen for outbound travel. This year, the city anticipates roughly 100,000 Chinese tourists, compared to over 500,000 in 2019.

Positive signs

Despite the challenges, San Francisco’s tourist business is improving. Arrivals from countries such as the United Kingdom, France, Germany, Italy, and India, which is now San Francisco’s fastest-growing inbound foreign market, have increased.

San Francisco Travel, the city’s tourist authority, anticipates more than 23 million foreign and domestic visitor visits this year.

Although this result falls short of the record-breaking 26 million visits in 2019, it is a huge gain over the previous year’s tally of 21.9 million.

Notable Events on the Horizon

San Francisco has numerous high-profile events planned for the future years, which contributes to the city’s upbeat outlook.

In November 2023, the city will host the Asia-Pacific Economic Cooperation Leaders’ Summit, the NCAA Division I men’s basketball tournament West Regional in 2025, and Super Bowl LX in 2026 at Levi’s Stadium in adjacent Santa Clara. In addition, the Bay Area has been chosen as a FIFA World Cup host city for 2026.

However, with the most of these events still a few years away, San Francisco faces an uphill struggle in the short future.

Repairing the city’s image and resolving public safety and sanitary problems will be critical to its revival.

Repairing San Francisco’s image

While the Omni San Francisco Hotel has profited from its position in the city’s busy financial centre, leisure demand remains low, according to Peter Strebel, Chairman of Omni Hotels & Resorts.

This, according to Strebel, is due to poor national news coverage that has exposed the city’s issues with public safety and cleanliness.

Emmy Hise of CoStar Group, on the other hand, is upbeat about San Francisco’s future. San Francisco Travel has started a $6 million campaign dubbed “Always San Francisco” in an effort to improve the city’s image.

The initiative intends to refocus public attention on the city’s major tourist sites, diversified neighbourhoods, and innovative gastronomic options.

The multi-channel campaign comprises a television ad in important feeder areas within the United States, as well as worldwide marketing via digital media.

The majority of tourists’ experiences in San Francisco, according to Lynn Bruni-Perkins, Chief Marketing Officer at San Francisco Travel, vary from the unfavourable image in the media.

She notes a high return rate, with 92% of visitors in 2022 expressing a desire to return to the city, demonstrating the destination’s allure.

Sean Hennessey, Clinical Assistant Professor at New York University’s Jonathan M. Tisch Centre of Hospitality, sees San Francisco as having a bright future.

Despite the city’s present struggles, he thinks the city’s appealing market fundamentals and distinctive services will contribute to its eventual recovery and prosperity.

In Conclusion, although San Francisco has seen setbacks in the rehabilitation of its hotel and tourist industries, the city’s efforts to advertise its assets, attract important events, and enhance public image are critical steps towards a successful return.

San Francisco, with its famous buildings, various neighbourhoods, and culinary pleasures, remains a promising destination for visitors from all over the globe.