by Calculated Risk on 8/24/2009 08:06:00 PM

From the SF Gate: Hotel losses mount, hurting city's coffers (ht Michael)

In June, the average room rate in San Francisco was $134, the lowest it has been since 2005 and well below the $162 peak in June 2008 ... For a while, managers filled rooms by offering lower rates, but the number of visitors also has begun to slide, and in June, occupancy tumbled to 73 percent, down from 85 percent the same time last year.

A 17% decline in room rates, and a 14% decline in occupancy rates, suggests about a 30% decline in RevPAR (Revenue Per Available Room).

Add to the troubled mix the fact that many hotel owners, in San Francisco and across the state, financed purchases or refinanced loans between 2005 and 2007 - when the hotel values were at their peak. Since then, hotels statewide have lost 50 to 80 percent of their value, meaning that many owners owe far more than their asset is worth.

Hospitality industry analyst Alan Reay calls the situation a "perfect storm" that won't improve any time soon ...

Actually this is a perfect storm everywhere for hotels. Too much supply - and more coming online every day. Too much debt. And too few guests.