Hospitality workers see troubling trend as major San Francisco hotel investor skips loan payments
SAN FRANCISCO -- San Francisco hospitality workers say a decision by a major hotel group to scale back operations in the city is part of a troubling trend.
"Recently, I have noticed that it's getting pretty brutal," Wilgens Pierre Grigsby Olson, a hospitality worker near Union Square, told CBS News Bay Area. "A lot of businesses are starting to leave. As someone who wishes to have business inspiration and wanna get an investment property, it's hard to look at investing in the city for the future."
That's especially true after Park Hotels and Resorts, the investment firm that owns Hilton San Francisco Union Square and Parc 55 hotels, announced on Monday that it has stopped making payments on a $725 million loan as part of its plan to reduce its presence in the city. These two hotels alone offer nearly 3,000 rooms.
"I wonder what San Francisco would look like in years," said Olson. "Is it going to be, like, more business will pull out [because] they don't wanna be here because of crime? It's understandable, though."
That's one reason Park Hotels and Resorts cited for their decision.
In a statement, the firm's CEO, Thomas Baltimore, Jr., said that San Francisco's "path to recovery remains clouded and elongated by major challenges including office vacancies caused by companies letting employees work-from-home, a weaker than expected citywide convention calendar through 2027 and concerns over street conditions."
"It makes sense from a business perspective," added Olson. "You can't blame these companies for saying, 'Hey, this doesn't make any sense, we're paying more for security.' And you know, I get it, they don't wanna deal with this, but it's also like, hey, you didn't even wanna stay and fight it at all."
Mayor London Breed also reacted to the announcement in a statement that read in part: "These kinds of ownership changes do happen, but these hotels will remain open and operating, and the workers will continue to be employed. Still, we know there is a lot of work ahead of us, and we will continue to focus on our economic recovery."
Efforts to revitalize downtown San Francisco and address its complex issues remain a priority for city officials and organizations like the Bay Area Council.
"Many who live in San Francisco and know the city understand there's more to it than just two hotels," said Rufus Jeffris, Senior VP, Media, Communications & Major Events at Bay Area Council. "The problems we see on the streets are undeniable and must be dealt with. They are deterring and discouraging people from visiting San Francisco, spending time here, and spending money.
"More importantly, they hinder people from enjoying the city and adding to its vitality. So, yes, another drumbeat of unfortunate news does not help with the overall message."
Hotel consultant Bob Rauch says he thinks the announcement is a tactic to prompt the city to act to clean up the area and get the lender to re-negotiate the current $725 million loan on the properties.
"The terms of the loan, the length of the loan, even the amount of the loan can all technically be renegotiated, but they're typically not done like this publicly," said Rauch. ""They're airing their dirty laundry so to speak, but they're doing it in a way that, perhaps, is designed to get attention to the problem."
Experts say even if Park Hotels and Resorts doesn't make the loan payment this month, the bank cannot start the foreclosure process unless the payments are behind by more than 90 days, which means there is plenty of time to negotiate.
Unite Here Local 2 told KPIX Tuesday that hotel workers "would not be affected by any change in ownership of their hotels. These sales are frequent in the hotel industry, so our union has secured contract language that requires hotel owners and operators to retain staff in the event of a transfer and to negotiate with union about an impact on workers."