San Francisco Chronicle
01/14/19

Hurdles Remain as Historic Hearst Building in SF Seeks Hotel Conversion
By Roland Li

https://www.sfchronicle.com/business/article/Hurdles-remain-as-historic-Hearst-Building-in-SF-13529589.php

A years-long effort to convert the historic Hearst Building into a hotel in downtown San Francisco faces opposition from neighbors and design challenges related to existing long-term leases.

The 1909 building at 5 Third St. was once home of the San Francisco Examiner and currently includes offices and retail shops. In 1938, famed architect Julia Morgan redesigned the building’s entrance, lobby and roof.

Property owner Hearst Real Estate worked with developer JMA Ventures to propose a high-end hotel conversion with 170 rooms in 2016. Hearst Corp. owns both Hearst Real Estate and The Chronicle…
…San Francisco has a hotel shortage, thanks to strong tourism and business travel, and it’s difficult to get new hotels approved, said Alan Reay, president of Atlas Hospitality Group, an Irvine hotel brokerage. The $551 million Moscone Center expansion, which finished this month, is expected to increase hotel demand even more this year.

“I think the city is definitely underserved,” Reay said. “It’s such a long gestation period in San Francisco to get anything through, approved and finally constructed.”

Only one hotel opened last year in San Francisco, the 42-room Lodge at the Presidio. There are 49 proposed hotels, with a total of 7,056 rooms, under city review, according to Atlas Hospitality Group.

Two hotels — Yotel at 1095 Market St. and Virgin Hotel at 250 Fourth St. — were set to open last year but will open in 2019, according to their websites.

Reay thinks the Hearst hotel project would be successful because many travelers prefer staying in historic buildings. He estimates that the project could command nightly room rates of $185 to $200.

Chapman agrees that the city needs more rooms.

“There’s not enough hotel rooms, especially with an expanded Moscone,” he said.