Dive Brief:
- Hilton Oakland Airport in Oakland, California, will permanently close on Aug. 28, a Hilton spokesperson told Hotel Dive.
- The 360-room property is owned by Park Hotels & Resorts, which made headlines last year when it ceased loan payments on two other Bay Area properties: Hilton San Francisco Union Square and Parc 55 San Francisco.
- In Park Hotels’ latest earnings call, the company’s chairman and CEO, Tom Baltimore, called San Francisco a “challenging market,” adding that leaving behind the two hotels last year “meaningfully improved our balance sheet and operating metrics.”
Dive Insight:
A Hilton spokesperson said the decision to close Hilton Oakland Airport permanently came from hotel ownership.
“We are working to support our dedicated Team Members with assistance exploring potential transfer opportunities within Hilton and we remain committed to doing our part to drive business, tourism and growth across the Bay Area and the State of California,” the spokesperson added.
Park Hotels declined to comment. In a fourth-quarter earnings call held earlier this year, however, Baltimore said, “Given how San Francisco has played out, I think we would all agree that that was a very wise and very prudent decision, while difficult, [and] certainly the right decision for Park and for our shareholders.”
Exiting the hotels, Baltimore added, allowed Park to return $630 million of capital to shareholders.
According to Marcus & Millichap’s San Francisco market report, the metro area’s hospitality sector “is enduring a unique set of challenges amid record-high office vacancy, a slow return of international travelers from Asia, concerns over safety in the city, and recent tech industry headwinds.”
The report also cited a pullback in convention business as a negative factor impacting hotels.
In 2023, hotel purchase activity in California dropped 56.3%, according to San Jose’s The Mercury News. And in Northern California, which includes the Bay Area, hotel acquisitions fell 48.3% when measured by dollar amount.
At the time of Park’s exit from the two downtown San Francisco hotels last year, Baltimore said: “It is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market. Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges.”
Accor, meanwhile, has selected the market to host the first U.S. hotel in its Handwritten Collection, which it plans to open this summer.
