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 has 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 openings of the Hotel VIA and Proper Hotel. 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 has significantly affected the greater San Francisco Bay Area lodging market, as evidenced by the nearly 64% decline in RevPAR 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 between mid-March and mid-September 2020; the city briefly reopened for leisure travel until restrictions were re-implemented between early December 2020 and late January 2021. While occupancy and ADR slowly improved throughout 2021, RevPAR remained significantly below pre-pandemic levels. Performance metrics are not expected to improve notably until business travel and convention business returns in earnest. Given the prevalence of the Omicron variant, most major technology companies have indefinitely postponed their return to office. The near-term outlook remains cautionary given that many of the aforementioned factors will continue to affect the market in 2022. However, the market is well positioned for a strong 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:

Legend
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)