San Francisco’s hotel market is now producing the kind of price tags usually reserved for distressed malls and failed office parks, with marquee properties changing hands at roughly a quarter of what they fetched less than a decade ago. The steep markdowns capture a broader reset in a downtown that has struggled to bring back workers, tourists, and convention traffic at anything close to pre‑pandemic levels.
What looks like a fire sale on trophy hotels is really a referendum on the city’s stalled recovery, from empty office towers to stubborn public safety concerns. I see the hotel deals as a clear, quantifiable signal of how far values have fallen, how cautious investors have become, and how much work remains if San Francisco wants to rebuild a sustainable urban core.
Hotel values collapse as buyers demand deep discounts
The headline number that has grabbed attention is the roughly 75 percent haircut on some high‑profile hotel sales, where properties that once commanded nine‑figure valuations are now trading at a fraction of those levels. In one widely cited example, a large Union Square hotel that previously sold for several hundred million dollars was recently valued at barely one quarter of that prior price, reflecting both weaker cash flow and sharply higher borrowing costs for potential buyers. That kind of discount is not a minor repricing, it is a reset of what investors think San Francisco hospitality is worth in the current environment, and it aligns with reporting that documents how distressed owners are unloading assets at steep losses.
These markdowns are not happening in isolation, they are part of a broader pattern of lenders taking control of struggling properties and then selling them at prices that would have been unthinkable before 2020. Several downtown hotels have already been handed back to creditors after owners stopped making payments, a process that typically ends with foreclosure sales or negotiated transfers at heavily discounted valuations. Reporting on recent transactions shows buyers stepping in only once pricing reflects both the risk of a slow recovery and the cost of renovating aging buildings, with some deals closing at less than $100,000 per room in a market that once supported multiples of that figure.
Tourism, business travel, and convention demand have not fully returned
The collapse in hotel values is rooted in a simple reality: San Francisco is still not filling rooms the way it did before the pandemic, especially during the weekdays that used to be dominated by business travelers and convention attendees. Visitor numbers have improved from the depths of 2020 and 2021, but they remain below the peaks that supported premium room rates and strong occupancy across the city’s core neighborhoods. Analysts tracking the market point to lagging convention bookings at Moscone Center and a slower rebound in international tourism as key reasons why revenue per available room has not recovered to prior highs, a trend that is documented in recent tourism data…