While reports of San Francisco’s “Doom Loop,” the sensationalistic catchphrase for the city’s seeming economic death spiral, may be a media-fueled exaggeration, this longtime convention favorite has a long way to go when it comes to returning to the phenomenal pre-pandemic luster the first-tier destination enjoyed.
But with the lion’s share of top AI companies located in a city that has powered previous technology revolutions, some believe this transformative tech will once again pull this phoenix of a city from the proverbial fire.
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Exhibit A in the Doom Loop portrayal is the city’s downtown, which has been fairly gutted by an exodus of businesses—most notably the technology companies that in 2011 were given tax breaks to revitalize the rundown Mid-Market area. Joining them are anchor retail stores such as Macy’s—a foundation of Union Square since 1929— Nordstrom and others.
Much of the doom and gloom can be attributed to the now-permanent pandemic exodus of downtown office workers, as well as consumers buying goods online rather than in downtown brick and mortar establishments, a trend witnessed in many large U.S. cities.
“The perceptions that are sort of the ether right now, while not entirely without some connection to reality, are really overblown in terms of what the experience is—this is not a zombie apocalypse, a monolithic experience here,” said Scott Beck, who in September 2023 was hired as president and CEO of San Francisco Travel. “This is still a city that has vibrant neighborhoods, and so much of the city is still what San Francisco was.”
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Ultimately the lead salesperson for San Francisco tourism and conventions, Beck recognizes that safety and security has been reported as a top concern of many organizations considering San Francisco. Beck, however, attributes most of the city’s lag in convention business to being sized out of many conventions, a downtown decimated by the move to remote work, and also a nearly dormant sales effort during the height of the pandemic.
“I would say we’re having really good conversations with many of our existing clients, and some of the clients that have chosen to go to other destinations,” Beck said. “Some of the clients that we had for a long time grew to be very, very large events; they’re likely going to find homes in a market that’s a little bit bigger than ours. [Events] like Oracle OpenWorld and others that are 45,000 people are likely going to be in a different location. But I think entities like Salesforce, who is not just connected to this community, but born and of this community, are trying to find ways to make that investment in our community moving forward.”
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Current and Future San Francisco Bookings
Beck stressed that San Francisco Travel’s sales effort was essentially shut down during the pandemic and is now ramping back up to speed.
“We are feeling the effects of two years of almost an inability to have any sort of sales effort,” he said. “2024 is not negatively impacted because of what you would call the safety and security or the 'Doom Loop.' It’s been impacted because we had two years where there were no sales efforts, in ’20 and ’21. There are a few groups—you can count them on one hand—that aren’t here that would have been here in 2024, that expressed concerns around safety and security. ’25 and ’26 look so much better than ’24, and our lead volume is on par with 2022 and just slightly behind 2019 in terms of our citywide business. So, I’m feeling optimistic.
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“We’re going to reach 2019 revenue levels by the end of ’26,” Beck predicted. “We’ve got things like the Super Bowl and FIFA [World Cup] that are really going to help, and the NBA All-Star game—a lot of wins that we’re having. But we are a community not unlike many other urban environments; we have to come to terms with what work from home means and how that’s going to affect business, transient and the vibrancy of our downtown core.”
In terms of future business at Moscone Center driving room nights, San Francisco is making strides, registering more than 618,000 nights in 2023 after a 2022 that saw only 338,549 actualized. It’s still a far cry from the nearly 968,000 actualized in 2019, however.
Occupancy came in at 64.2% in 2023, down from nearly 83% in 2019, but San Francisco Travel Association predicts the rate will rise to 73.5% in 2027.
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Walking Away? San Francisco Hotel Defaults
Alarm bells were ringing in 2023 when Park Hotels announced it had stopped making payments on a $725 million loan for the 1,024-room Parc 55 San Francisco and the 1,921-room Hilton San Francisco, both top San Francisco meetings and conventions hotels. Westbrook Partners, owners of the 155-room Four Seasons at the Embarcadero, followed suit in March 2024, receiving a notice of default for a more than $70 million loan after failing to make payments for three months, according to the San Francisco Business Times. Hilton Financial District was also hit with a notice of default, in January 2024.
“I don’t think hotels have walked away, I think investment portfolios have walked away—those are two different things,” Beck, a former hotel executive, said. “The hotel community is not where those decisions were made. I can tell you, Hilton has not wavered in their management of the Hilton Union Square or Park 55. Again, the investment portfolio might have, but the brand Hilton has not and neither has any of that management team; they are still as engaged as they were before.”
A Hyatt That’s Bullish on San Francisco
One hotel not only sticking it out, but investing in its property, is Hyatt San Francisco.
The hotel, which celebrated its 50th anniversary in 2023, finished a $50 million renovation in 2022 that resulted in a complete teardown of its guest rooms that ultimately resulted in vastly improved bathroom facilities, floor-to-ceiling windows in some, and 15 more rooms being added to its inventory due to an innovative redesign.
The property is also reviving the revolving restaurant that crowns the 20-floor building after a 40-year staff engineer wanted to see it spin one last time before retiring, inspected the gear mechanism and discovered it could be brought back to life. The former Equinox restaurant is now a Regency Club Lounge but will be available for event rentals at select times.
According to Mathew Humphreys, area vice president and general manager of the hotel, which has 821 rooms and 72,000 square feet of meeting space, just getting prospective meeting buyers in-house to see the city for themselves usually changes perspectives.
“They get here and from the second they hit the door, they can already tell that their perception was wrong—just from the ride in from the airport,” he said. “As we show them around it’s immediate—they’re ready to come look at us, they start sending us leads to look at. We’ve got to get more and more of them here to have that conversation happen.”
Like many in the city, Humphreys believes the next “Gold Rush,” in the form of AI startups, is already in motion, and will hopefully bring some of the glimmer back to downtown San Francisco. The 2023 Forbes AI 50 List, in fact, found that “San Francisco alone is home to 20 of the best-funded AI companies—more than the rest of America combined.”
“Salesforce bought Slack. Slack moves into the Salesforce Tower leaving the Slack building on Mission open—we’re watching that because it’s so close to our hotel,” Humphreys said. “Who’s gonna take it? Well, Entropik, the AI company, comes in and takes it. It’s that whole world of AI I think will be the next boom for San Francisco.”
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