United States -  San Francisco - San Mateo

The San Francisco Bay Area emerged as one of the strongest lodging markets in the U.S. over the past decade because of its robust economy, designation as a top-tier travel destination, and high barriers to entry. The Bay Area’s diversified economy has been led by the technology sector, which is spread throughout this region, driving continued employment gains. Additionally, more venture capital has been attracted to San Francisco than any other city in the U.S. in recent years. Convention and tourism demand also reached record levels in 2019. RevPAR increased exponentially over the past several years, mainly driven by double-digit ADR gains. In 2016, occupancy remained flat while ADR grew at a more modest pace, registering the slowest growth rates since 2009. Both occupancy and ADR declined in 2017 given the renovation and expansion of the Moscone Center, as well as the entrance of new supply. Occupancy continued to decline in 2018, but ADR increased for the year, as local hoteliers worked together to book in-house groups to lessen the impact of the convention center renovation project. Given the record convention year in 2019 following the renovated facility's full opening in January, RevPAR reached a new peak, with an exceptionally strong first quarter driving above-inflationary rate growth for the year.

The COVID-19 pandemic significantly affected the greater San Francisco Bay Area lodging market, as evidenced by the nearly 64.0% RevPAR decline in 2020. San Francisco was one of the first cities to implement a shelter-in-place mandate mid-March and impose limits on gatherings and business activity. All major conventions after March 2020 were canceled or postponed, with an estimated impact of nearly $700 million in lost spending. Hotels were prohibited from accommodating non-essential business travel for portions of 2020 and 2021. While occupancy and ADR slowly improved throughout 2021, RevPAR remained significantly below pre-pandemic levels. Performance metrics trended upward in 2022, supported by the return of tourism and meeting/group business. However, office vacancies have continued to rise, remaining at record levels, and many companies are still implementing hybrid workforce policies. In addition, significant layoffs and hiring freezes occurred in late 2022 and early 2023. A strong convention schedule should bolster performance in 2023, but the weak booking pace for 2024 is expected to lengthen the recovery. While the near-term market outlook is unfavorable, the market remains well positioned for a stronger recovery in the long term because of San Francisco’s diverse economy and popularity as an international tourist destination.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

John Berean
Senior Vice President, Hawaii and Northern California Region Leader
Valuation, Market & Feasibility Consulting
[email protected]
  • +1 281 381-3456 (w)