The previous three and a half years have been challenging for San Francisco and its hotel industry, and market participants have been unable to articulate a linear recovery trend. However, recent conversations with many hotel market participants reveal a renewed optimism about long-term improvement for the San Francisco market. The beauty of the area, a large international airport that serves as a domestic and international gateway, an appealing convention center with a variety of hotel inventory, established food and wine culture, and proximity to iconic recreational and cultural areas are demand drivers that are timeless.  

Reestablishing the economic benefits of the hotel market, however, will require time and patience. A number of San Francisco hotels and hotel loans are being actively marketed, and just as the office market is being reset in the San Francisco with sharply lower sales prices, the hotel investment market is also in a period of price discovery. Over the next few years, occupancy levels are anticipated improve but remain below pre-pandemic peaks, with more gradual annual ADR improvement. Has the bottom been reached? The market’s performance in 2024 may help us get closer to an answer, and savvy long-term hotel investors have begun circling to capitalize on potential opportunities.