SAN JOSE — As Bay Area hotels remain well below the lofty levels of success they had achieved before the onset of lockdowns to combat the spread of COVID-19, some lodging hubs in downtown San Jose are showing signs of a comeback.
These trends are visible in key benchmarks that experts use to assess the hotel market, according to information provided by CoStar, which tracks the commercial real estate industry.
Signia by Hilton San Jose hotel at 170 South Market Street in downtown San Jose, seen in 2022. (Dai Sugano/Bay Area News Group)
“A lot of the hotel markets that are primarily business-oriented, such as San Francisco, Oakland and San Jose, are struggling the most,” said Alan Reay, president of Atlas Hospitality Group.
In 2024 compared with 2023, hotel markets in San Francisco, Oakland, Los Angeles, Anaheim and Phoenix, as well as California overall, suffered weaker performance. The declines snapped three straight years of improvement following the pandemic.
Downtown San Jose was an exception.
In 2024, the city’s urban core saw a big improvement compared with 2023 in the industry’s most closely watched benchmark: revenue per available room.
“We’re seeing the fastest hotel rebound in the Bay Area,” San Jose Mayor Matt Mahan said.
Here is how several key markets fared in 2024 compared with 2023 in terms of revenue per available room, according to reports CoStar provided to this news organization:
• Downtown San Jose: $139.40, up 27.9%
• San Jose: $116.23, up 9%
• Oakland: $88.55, down 5.2%
• San Francisco: $139.34, down 4.9%
• Los Angeles: $139.68, down 1.7%
• Anaheim: $149.15, down 1.5%
• San Diego: $157.90, down 4.9%
• Sacramento: $101, up 2.2%
• Monterey County: $179.05, up 1.5%
• Santa Barbara County: $168.86, up 1.5%
• San Luis Obispo County: $190.32, down 0.3%
“San Jose’s downtown is stabilizing above its peers in both San Francisco and Oakland for various reasons, including an increase in conventions and other related travel,” said Joshua Burroughs, a partner with local real estate firm Urban Catalyst, which developed the 176-room Marriott TownePlace Suites at 495 West San Carlos St. in San Jose that is slated to open next month.
Business leaders and San Jose officials are attempting to create unique venues in the city’s downtown in hopes of creating more of a destination feel.
“San Jose is doing all it can to transition into the experience economy,” said Bob Staedler, principal executive with the land-use consultancy Silicon Valley Synergy. “We’re seeing some of that reflected in the downtown hotel numbers.”
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The Bay Area’s major urban hubs for hotels still languish far below the heights they had achieved in 2019, according to revenue per available room data provided by CoStar. Of the three, San Francisco saw the largest decline at 31.4%.
As a result, a burst of foreclosures and property purchases have occurred in the region, especially in San Francisco. Atop Nob Hill, the historic Huntington Hotel went into foreclosure and was later sold to a new owner at a steep discount.
In 2023, the owner of the 1,024-room Parc 55 and the 1,921-room Hilton San Francisco Union Square simply told lenders that the financiers could take ownership. The owner decided it no longer made sense to keep making payments.
In Oakland, the Courtyard Oakland Downtown was purchased by Core Capital for $10.6 million, 76% less than the $43.8 million that the seller, a Gaw Capital Partners affiliate, paid in 2016, according to documents filed on Oct. 2, 2024, with the Alameda County Recorder’s Office.
Oakland’s largest hotel, the 500-room Oakland Marriott City Center at 1001 Broadway, went into default in February due to a delinquent $100 million loan.
San Jose’s largest hotel, the Signia by Hilton, is in default on a $136 million loan. Its owner is attempting to attract financing to avoid foreclosure.
These long-term struggles are happening ahead of a trifecta of huge sporting events that are headed to the South Bay in 2026, including the Super Bowl, FIFA World Cup matches and a round of the NCAA Men’s basketball tournament.
As a result, San Jose’s mayor wants to be certain the city is fully prepared to host visitors.
“As we invest in our experience economy, and a safe and clean downtown, more and more people see San Jose as a destination for sports, arts and entertainment,” Mahan said. “With 2026 right around the corner, the future of the largest city in Northern California is bright.”
