In 2009, hotel room rates in San Francisco and the nation suffered their biggest annual decline since the Great Depression, according to an analysis of recently released data.
San Francisco's daily average room prices fell nearly 16 percent from $190.12 in 2008 to $160.27 in 2009, according to research compiled by PKF Consulting, a hospitality industry research group.
The city's downward trend started in the fourth quarter of 2008 and continued throughout the year. In June, the average room rate was $134, the lowest it had been since 2005. For December, the average rate was even lower, $132.81.
Fewer guests accompanied the lower rates. At 75.5 percent, occupancy in 2009 was down 4.3 percent. In June, occupancy fell to 73 percent; in December it tumbled to 65 percent.
San Francisco's year over year room price drop was worse than the Northern California average decline of 13 percent, but consistent with other big tourist cities on the nation's coasts, according to Tom Callahan, CEO 0f PKF Consulting.
Callahan said the steep declines from a year ago are the worst since his company started tracking hotel numbers in 1933.
"Everyone is in the tank," Callahan said. "But we're also pretty close to bouncing along the bottom."
Callahan predicted that tourism would likely start to improve in the middle or second half of 2010 as consumer confidence improved.
The ailing hospitality industry is bad for hotel owners as well as city coffers. Hotel occupancy taxes contribute $140 million to the city's general fund annually, according to San Francisco's chief economist, Ted Egan.
In addition to room rates, the value of hotels has also decreased dramatically.
At least 15 San Francisco hotel owners have defaulted on their loans, including the Stanford Court and the Four Seasons, according to hotel industry analyst Alan Reay.
Reay said 12 Manhattan hotels are in default, as are more than 20 San Diego hotels.
"In the coming months we'll see a lot more distressed deals going into default and being foreclosed on," Reay said.
