By Alex Barreira – Staff Reporter, San Francisco Business Times

Jul 29, 2024 | Updated Jul 29, 2024 2:24pm PDT

Bay Area hotel production has come to a virtual halt in 2024 with just two properties opening up across the region’s nine counties through the first six months of the year.

The latest hotel production survey from Irvine-based Atlas Hospitality finds sluggishness across the state that’s persisted since 2023. Despite a slight increase in production compared with this time last year, the report said higher financing and construction costs continue to hamper hotel projects from reaching the finish line.

“We have definitely seen an increase in hotel projects that were in planning being deferred or abandoned,” wrote Atlas President Alan Reay in the report. “We have also seen a number of hotel projects that started construction but are now on hold with no work being performed.”

The two Bay Area hotels to open in the first half of 2024 were:

• the 110-room TownePlace Suites by Marriott Pleasanton, at 7260 Johnson Dr. in Pleasanton;
• and the 127-room Home2 Suites by Hilton San Jose Silver Creek, at 5952 Silver Creek Valley Rd. in San Jose.

San Francisco saw no new hotels open in the first half of this year, and none in all of 2023. As of mid-2024, San Francisco has three hotel projects that are technically under construction, per the report, though the completion of one is uncertain and another highly unlikely:

• Waldorf Astoria San Francisco, 169 rooms at 50 1st St. (that project is part of the Oceanwide Center albatross that will never be built);
• Hearst Auberge San Francisco, 150 rooms at 5 3rd St., delayed since 2022 and whose entitlement expires April 2026;
• and a 20-room addition to the InterContinental Mark Hopkins Hotel at 1000 California St.

At the San Francisco Travel Association’s marketing conference in March, the destination marketing organization reported three hotels in the “final planning” phase: the 150-room Hearst Auberge hotel, a 130-room AC Hotel, and the 160-room Pod Hotel.

In 2023 the Bay Area saw a dozen new hotels representing 1,613 rooms, per Atlas. The largest among them the 240-room CitizenM Menlo Park Facebook HQ (found at 300 Constitution Way in Menlo Park).

Across California as a whole, 22 hotels opened in the first half of this year, a 10% increase (from 20 in the first half of 2023) but with 15% fewer rooms overall (2,705 rooms, versus 2,289 rooms in the first half 2023).

Total hotels under construction statewide, as tracked by Atlas, is unchanged at 122 properties, but the group cumulatively represents 5% fewer rooms (16,321 rooms versus 15,468 in the first half of last year).