It's no secret that San Francisco has lagged behind other major U.S. cities in terms of its tourism comeback, but the scope of that lag remains startling.
Data from hotel analytics firm STR indicates that June RevPAR in the San Francisco market was down 19.6% over the same period last year, while occupancy slipped 6% and average daily rate (ADR) fell 14.5%.
Those declines stand in stark contrast to performances in other gateway cities, with New York's June RevPAR up 7.5%, Chicago's rising 6.5% and Los Angeles' eking out a 0.3% gain.
"Most U.S. urban markets have been seeing positive hotel performance, and if there are declines, they're pretty modest," said Emmy Hise, senior director of hospitality analytics at CoStar Group, parent company of STR, adding that San Francisco is also one of few U.S. markets where ADR hasn't exceeded 2019 levels.
"And that's a big deal, especially considering what inflation has been."
Overall, Hise said, "San Francisco has been one of the least recovered markets out of the top 25 markets in the U.S., and that's been a trend throughout the entire recovery."
Photo Credit: Courtesy of San Francisco Travel
The campaign targets leisure travelers and meeting planners and is San Francisco's first to include television advertising.
Hise attributed San Francisco's sluggish rebound to several factors, including the market's outsized reliance on the tech industry, which has been slow to resume prepandemic business travel patterns, as well as the fact that the city's convention business has yet to fully bounce back. Hise estimates that the number of hotel rooms booked in relation to conventions in San Francisco remains about 300,000 rooms short of 2019 levels.
Also contributing to the market's prolonged recovery: the slower-than-expected return of inbound international travel from Asia. China, which had been San Francisco's top international market before the pandemic, was among the last major global markets to reopen to outbound travel.
"We saw nearly half a million visitors from China in 2019," said Lynn Bruni-Perkins, chief marketing officer for San Francisco Travel, the city's tourism board. "This year, we're projecting around 100,000, so that's impacting things."
Positive signs?
That shortfall, however, is being partially offset by an uptick in arrivals from markets like the U.K., France, Germany and Italy, as well as India, San Francisco's fastest-growing inbound international market.
Across both international and domestic segments, San Francisco Travel is forecasting more than 23 million visitor arrivals this year. Although that remains below 2019's record-setting 26 million visitors, Bruni-Perkins described the sum as "a big improvement" over last year, when 21.9 million people visited.
"We are seeing positive signs," said Bruni-Perkins, citing the fact that San Francisco has several marquee events on its calendar, including the 2023 Asia-Pacific Economic Cooperation Leaders' Summit this November.
The city will host the 2025 NCAA Division I men's basketball tournament West Regional, and Super Bowl LX will take place at Levi's Stadium in nearby Santa Clara in 2026. The Bay Area was also chosen as a FIFA World Cup site in 2026.
With most of those events several years out, San Francisco continues to face an uphill battle in the near term.
A still from the San Francisco's Always San Francisco campaign ad, which looks to reinvigorate the city's public image. Photo Credit: Courtesy of San Francisco Travel
Repairing San Francisco's image
Peter Strebel, chairman of Omni Hotels & Resorts, reports that while the group's Omni San Francisco Hotel has been buoyed by its location in the city's financial district, where banking-related business travel has been robust midweek, leisure demand at the property remains underwhelming.
He attributes that to a spate of negative national press, which has put the spotlight on San Francisco's issues with public safety and cleanliness.
"Leisure has not really come back," Strebel said. "Our weekends are slow. And I think a lot of it has to do with the city's political climate and the crime and the homelessness."
CoStar's Hise, however, remains optimistic.
"San Francisco Travel is doing a good job of attracting events that will get a lot of attention in future years," she said. "They're using the right strategies to highlight the benefits and beauty of their city, but it might just take a little while for perception to change."
Those strategies can be seen in a $6 million campaign launched by San Francisco Travel, its biggest to date, to try and restore the city's image.
Rolled out in May, the ad push is running under the tag line "Always San Francisco."
"Right now, there are a lot of challenges in terms of how we're portrayed in the media," said Bruni-Perkins. "The areas that have the most challenges are pretty small areas of the city. The media tends to focus just on those areas. But that is just not what most visitors experience."
In the U.S., the 16-week campaign is anchored by a TV commercial airing in key feeder markets like New York, Chicago, Washington, Boston and Houston.
"These are also markets that have a large number of meeting planners," said Bruni-Perkins, "because we know from our research that meeting planners will often look toward leisure marketing when making their destination decision."
The campaign is also being deployed internationally, primarily via digital channels.
Bruni-Perkins said the "Always San Francisco" effort seeks to redirect public discourse by playing up the city's iconic tourist attractions, diverse neighborhoods and creative culinary offerings.
"When visitors do come to San Francisco, we often hear them say, 'It's really different from what I expected and am seeing in the media,'" said Bruni-Perkins. "And we know that 92% of visitors to San Francisco in 2022 said they would return, which is a huge return rate for a destination."
Sean Hennessey, clinical assistant professor at New York University's Jonathan M. Tisch Center of Hospitality, is similarly bullish on the destination's fundamentals.
"San Francisco certainly retains a lot of the interesting and tourist-friendly attributes that have made it successful," said Hennessey. "Right now, San Francisco is taking it on the chin, but I do believe it's an attractive market over the long term and that it will be just fine."