Wednesday, March 12, 2025

San Francisco’s hotel market in the US is undergoing a turbulent transformation in 2024, with historic properties reopening, major hotels struggling under financial burdens, and casino resorts expanding across California. While some iconic hotels are making a comeback with extensive renovations, others remain in limbo as ownership uncertainties and foreclosure risks loom. Meanwhile, casino resorts, particularly on tribal lands, are thriving, driving a shift in California’s hospitality industry. As the city’s largest hotels seek new buyers and business travel remains below pre-pandemic levels, the future of San Francisco’s hotel landscape remains uncertain, reflecting broader industry challenges and evolving tourism trends.

California’s Changing Hotel Landscape in 2024

The hotel industry across California is undergoing major shifts in 2024. While new hotel openings have declined significantly, one sector is gaining traction—casino resorts. In San Francisco, some of the most iconic hotels are undergoing transformations, with reopenings, sales, and conversions reshaping the city’s hospitality sector.

Casino Resorts Lead Growth in California’s Hotel Industry

The hospitality industry across California has experienced a slowdown in new hotel developments. A report found that only 35 hotels opened in 2024, marking a 34% decrease from the previous year. In contrast, 88 hotels opened in 2021, and 92 in 2019, showcasing the current decline.

None of the newly opened properties in 2024 were large-scale luxury resorts. Instead, they consisted primarily of standard chain hotels, such as Hilton’s Hampton Inn and Marriott’s Fairfield Inn. The total number of rooms added across the state last year was 16,468.

However, casino hotels are emerging as a dominant force in the industry, especially in the Bay Area. The most significant hotel to open in 2024 was the Chicken Ranch Casino Hotel in Jamestown, a small town with fewer than 4,000 residents. This 197-room property stands out because it operates on tribal land, significantly reducing development costs.

Several other casino expansions are in progress. A new $700 million casino hotel is planned for Vallejo, strategically located near a major highway and a popular amusement park. Another large casino, Graton Resort & Casino, is expanding its hotel capacity by adding 400 new rooms to its existing inventory. Meanwhile, the River Rock Casino is set to introduce a 100-room hotel as part of its expansion plan.

The increasing dominance of casino resorts in California’s hospitality industry highlights a shift toward entertainment-driven tourism.

San Francisco’s Hospitality Sector: A City in Transition

San Francisco’s hotel industry is still in recovery, with occupancy rates, revenue per room, and overall demand below pre-pandemic levels. In October 2024, occupancy was at 64%, compared to 82% in 2019. Experts predict a full recovery might not occur until 2028 or later.

Despite this, some hotels in San Francisco are undergoing major transformations.

A Historic Hotel Reawakens in Nob Hill

One of the most anticipated projects in San Francisco is the reopening of a historic Nob Hill hotel. Originally opened in 1922, the 12-story landmark closed during the pandemic and remained shuttered for years. The property, once an iconic part of the city’s skyline, is now undergoing a massive renovation that will introduce larger guest rooms and modern amenities, while preserving its historic charm.

The reopening also marks a significant step for the local hospitality workforce, as employees from the previous operations are being given the opportunity to return.

San Francisco’s Largest Hotel Moves Toward New Ownership

San Francisco’s largest hotel, a 1,921-room property, and another 1,024-room hotel have been operating without ownership since 2023, when the previous management company ceased mortgage payments on a $725 million loan.

A buyer has now been identified for the hotels’ debt, although the transaction details remain undisclosed. If finalized, this could lead to a sale or potential foreclosure, depending on the financial strategy of the new owners.

The sale is critical for the city’s hotel sector, as the properties require tens of millions of dollars in renovations to remain competitive. Given their proximity to San Francisco’s largest convention center, their future is closely tied to the revival of conventions and business tourism.

One alternative proposed for the properties is a hotel-to-housing conversion. However, real estate experts argue that transforming hotels into apartments remains cost-prohibitive.

Despite these challenges, some partial hotel-to-apartment conversions have been successful. A major hotel in San Jose recently converted part of its property into student housing, offering a potential model for future projects.

Trendy Hotel Brand Exits San Francisco

A trendy boutique hotel that opened in 2022 in San Francisco’s Mid-Market district has now rebranded. Initially launched as part of a high-end hospitality chain, the hotel struggled to attract consistent bookings due to its location.

In 2024, the property switched to a global hotel brand, hoping to improve occupancy rates through a larger reservation network. This transition reflects the broader challenges faced by independent and boutique hotels in urban centers where competition from major brands is intense.

Meanwhile, the boutique chain that previously operated the property is facing financial difficulties across multiple cities, with some of its locations being sold at auction or rebranded under new ownership.

The departure of this brand from San Francisco underscores the shifting dynamics in the hospitality industry, where large hotel groups continue to dominate.

San Francisco’s hotel market in the US faces uncertainty in 2024 as historic reopenings, financial struggles, and booming casino resorts reshape California’s hospitality industry. While some hotels undergo major renovations, others face ownership challenges, reflecting shifting tourism and investment trends.

A Mixed Future for California’s Hotels

California’s hotel industry in 2024 presents a divided landscape. Traditional hotel developments have declined, but casino resorts are booming, particularly those on tribal lands. San Francisco’s hospitality sector is undergoing major changes, from historic reopenings to debt-ridden hotels finding new owners.

The industry’s recovery will largely depend on business travel, tourism, and economic stability. While San Francisco’s largest hotels remain in limbo, smaller properties and casino resorts are emerging as key players in shaping California’s hospitality future.