San Francisco's hotel performance initially turned the corner in March as a boost in demand from all travel segments helped to provide a more robust recovery and a much-needed win for the area, where the hospitality sector has been the hardest hit and slowest to recover nationally.
Significant improvement in the region's hotel occupancy has continued to occur each subsequent month, with occupancy reaching the highest points since the pandemic. In March, average occupancy exceeded 60% for the first time in two years. In April, occupancy was just under 69% and in May occupancy edged up to nearly 70%.
Group occupancy is showing the most substantial gains since the pandemic as more conventions and conferences are occurring in the market. However, group occupancy remains slightly below pre-pandemic levels for the region.
Weekday and weekend occupancy are also reaching peak pandemic levels. The weekday improvement is due to returning groups and increased corporate travel. The higher weekend occupancy reflects the return of more leisure travelers. Weekend occupancy outpaced weekdays throughout the pandemic, but it was not at the same velocity as seen in other markets. For the most part, San Francisco's average weekend occupancy level remained well below pre-pandemic levels largely due to strict COVID requirements.
The fact that weekday and weekend occupancy levels are back in line is another positive sign for San Francisco hotel occupancy as it shows that the market has diverse travel demand generators.
The recent improvement in top-line hotel performance is timely as some of the major hotels in the market are reopening. The 1,024-room Parc 55, a Hilton hotel, reopened in May, while the former Hotel Vitale reopened as a 1 Hotel after completing a $25 million renovation in June. Also in June, the iconic Sir Francis Drake will reopen under a new name, The Beacon Grand Hotel, after its 2021 sale to a joint venture between Angelo, Gordon & Co. and Northview Hotel Group. These prominent hotels are located in the Market Street area and had been closed since March 2020.
The area's strong hotel performance is expected to continue in June after the Golden State Warriors won the NBA Finals this month, which helped to add further hotel demand. Also, the summer months through September historically are San Francisco’s best performing months for hotels.