By Doyinsola Oladipo

NEW YORK (Reuters) – A snapshot of 15 major U.S. hotel markets shows that travel to cities is rebounding, with one notable exception: San Francisco.

Several hotel activity metrics, including average price per room, revenue per room, and supply growth, show most major cities have rebounded from the worst of the pandemic. Some, including Miami, Florida, and Austin, Texas, are seeing notable growth in both supply and revenue.

However, San Francisco, a top 3 locale in the decade before the pandemic, is struggling. It faces a decline in tech jobs, slow return of Chinese travelers, reduced downtown traffic as more people work from home, and rising crime and homelessness that has tarnished the city’s image.

Revenue per available room (RevPAR), a key performance metric, for San Francisco was down 30% in May 2023 from the same month in 2019, data from hotel analytics firm STR shows. Daily room rates averaged $207.72 in May, down 14% from $242.51 in May 2019.

Metrics like ADR and RevPAR are affected by seasonal trends but in San Francisco, the recovery is taking longer than in other major cities.

Earlier this month, real estate investment trust Park Hotels & Resorts said it planned to remove two hotels in the city from its portfolio. Developer Unibail-Rodamco-Westfield will transfer its Westfield San Francisco shopping mall to lenders after 20 years as it deals with declining customer visits.

Hotel Council of San Francisco CEO Alex Bastian said the recovery has been slow partly because of the sluggish return of visitors from mainland China, the city’s largest pre-pandemic tourist group.

European travel to the city is at 2019 levels and may even surpass them this year, Bastian added. “We are headed in the right direction.”

Miami has seen the most growth, with average daily rates and revenue per available room up 36% and 23%, respectively.

“Miami has been on a fairly seismic run when it comes to hospitality metrics,” said Scott Berman, board member of the Greater Miami and the Beaches Hotel Association. “I don’t know a hospitality operator that doesn’t want to be in this market.”

Miami is “the poster child” for strong leisure and healthy business demand as companies move their headquarters to Florida, said Jan Freitag, national director for hospitality analytics at commercial real estate analytics firm CoStar Group.

San Francisco is an “unfortunate outlier,” with companies still not back in the office and concern about social issues curtailing business and leisure travel, Freitag said.

“Those two markets are in essence the main storyline of the hotel industry after the pandemic.”

(Reporting by Doyinsola Oladipo in New York; Editing by Richard Chang)

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