San Francisco is still a long way from its freewheeling pre-pandemic boom times of record tourism and booked hotels, but city officials aren't wasting time acting on the city's nascent economic recovery after several years in the doldrums.
The San Francisco Planning Commission has approved a proposal for a 29-story hotel at 570 Market St. in downtown San Francisco. With 211 rooms, the hotel would be well timed to serve a revived hospitality market in the city, representatives on behalf of the project’s sponsor, Frontier Group LLC, said at a Planning Commission meeting.
The new Financial District hotel was first proposed back in 2019, when the city had a decade of steadily growing year-on-year tourism numbers. The onset of the pandemic in 2020 dried up hospitality investment and brought the advent of remote work to empty downtown office buildings. Since then, some of the city’s large hotels have defaulted on loans taken out before the pandemic upended tourism.
At the planning meeting about 570 Market St., Frontier Group cited an analysis from CBRE that predicted San Francisco would have the greatest revenue per available room growth in Northern California this year, at 8.4%, which the firm said far outpaces the national average of 1.3%. Analysts attributed that growth largely to the return of business travel and industry conventions in the city.
San Francisco has had a dramatic comeback with office leasing volumes hitting their highest level since 2019 thanks to the booming artificial intelligence sector. There are some expectations of a turnaround for San Francisco’s hospitality sector, as three major sporting events are expected to net the Bay Area more than $1 billion in economic output.
One boost came with the 2025 NBA All-Star Game, and the region will be the location of Super Bowl LX in 2026 in addition to serving as a host for the FIFA World Cup. Even though two of the three events are taking place in Santa Clara, a South Bay city near San Jose, the entire San Francisco Bay Area stands to gain from the expected influx of visitors.
Added spending
The events could collectively bring $1.4 billion in spending to San Francisco and surrounding cities, according to a report commissioned by the Bay Area Host Committee. Officials hope those events will generate positive images of the region to take the place of negative headlines about homelessness and crime that have dogged San Francisco in recent years.
Planning staff members note that the proposed hotel would not be completed for several years but that analysts project “that this type of high-end, view-oriented hotel would open into a strong and viable market.”
At the meeting, Commissioner Amy Campbell offered the project her full support: “This is in the heart of downtown. This is our primary commercial corridor,” she said. “This is where we welcome tourists and visitors.”
The proposed hotel is among the largest of several high-end downtown hospitality projects developers are pursuing. One is the planned conversion of the historic Hearst Building at Third and Market streets into a luxury hotel, and a five-star hotel is envisioned as part of a mixed-use office-hotel high-rise proposed for 530 Sansome St. near the desirable neighborhood of Jackson Square.
The downtown hospitality market has had a noticeable rebound this year, and the city’s downtown hotels still command some of the highest rates in California, according to a CoStar analysis, though they remain shy of 2019 levels, and the area “is still reeling in the wake of downsizing by anchor tenants such as Salesforce, Meta and Visa, contributing to historic office vacancies and sluggish business travel.”
Looking ahead, “occupancy will not reach pre-pandemic norms within the next five years,” according to the analysis.