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A Tale of Two Hiltons in San Francisco
August 25, 2016 -- Can back-to-back Hiltons in a raffish San Francisco neighborhood fill nearly 3,000 rooms and 164,000 square feet of meeting space daily?
That's the $530 million bet Hilton Worldwide placed 18 months ago when it bought the 1,024-room Parc 55 hotel in the city's seedy Tenderloin district. The Parc 55 is just across the street from the 1,919-room Hilton San Francisco Union Square. Both massive hotels were tired and past their prime. The Parc 55 had cycled through several owners and several brand flags in the last decade and the Union Square Hilton had a foreboding lobby and had shuttered many of its iconic features.
The results so far are encouraging. On three recent visits to the two hotels, the public areas were busy and buzzing, mostly with technology industry sales and managerial types.
At the San Francisco Hilton, $28 million was spent to rethink the lobby, rooms and restaurants. The new centerpiece of the massive lobby is a long, modern bar with hip lighting, 16 stools and a marble plank. There's also every type of seating imaginable: banquettes, community tables, stools high and low, solo seating, sofas, tables for two and tables for eight. A drab Starbucks kiosk has been replaced with Herb 'N Kitchen, the Hilton chain's proprietary grab-and-go food stall and minimarket. The lobby-level Urban Tavern Restaurant reverses its "breakfast-only" policy and reopens for dinner starting in October. And on the hotel's 46th floor, a bar-lounge serving up small plates and 360-degree city views opens in September.
Across the street, the 32-story Parc 55's lobby seating offers lots of privacy. The mid-century décor and earth tones make for a more relaxing mood. I didn't see any evidence of raucous tourist groups, the Parc's previous customer base. Judging from the open laptops, I'd estimate that about 50 or 60 percent of the lobby guests were business travelers.
Hilton hasn't made any major changes at the Parc 55 yet, though renovations are in the discussion stage, says a Hilton official. But the hotel's former steakhouse, closed before the Hilton purchase, has reopened under the name Cable 55. It offers a daily buffet breakfast and sells bar bites throughout the rest of the day. And a small space opposite the business center has been leased to a casual Thai restaurant called Kin Khao. It's already been awarded a Michelin star. "Don't let its covert location fool you," Michelin exclaims. The restaurant is "flagrantly delicious."
Location has been a challenge for both hotels for years. While the properties are pitched as being close to the Union Square shopping district, they are also located on the southern border of the Tenderloin. Historically, the 50-block "Loin" has been filed with dive bars, flophouse hotels, strip joints and, most recently, budget-priced Vietnamese restaurants. The area, also called Little Saigon, is generously sprinkled with street-corner sermonizers and down-and-outers who drink their whiskey out of a bag.
In the last year, however, the Tenderloin has been slowly gaining respectability. Thanks to comparatively low rents, start-up technology companies and fledgling businesses are moving in. So have upmarket restaurants and bars and interesting shops. The Tenderloin even has its own branch of Jane, an acclaimed coffee bar/bakery/cafe that got its start in San Francisco's tony Fillmore district.
The neighborhood, though still dirty, is safe. The district has its own police station a few blocks from the two hotels.
Frank Manchen, Hilton's area sales and marketing director, says concerns about the two properties' location are overblown. The two hotels he oversees are averaging an 80 percent occupancy. That's about what all San Francisco hotels register these days regardless of location.
The gritty neighborhood doesn't bother Chicago-based marketing executive Amber Naslund, a San Francisco Hilton regular. "I love it," she says. "I grew up in cities and like that it feels very urban. The Tenderloin is quintessentially San Francisco."
I caught up with Naslund in the hotel's lobby working at her "office"--a MacBook Pro and an iPhone 6. She praised the Hilton's free, high-speed WiFi, a perk of her HHonors membership.
"I definitely like the redesign and that I can get food and drink any hour of the day. With delays, I never know when I'm getting off the plane these days."
The San Francisco Hilton's renovated lobby is the San Francisco office for The Ticket Fairy, an events-marketing platform, whenever chief executive Ritesh Patel is in town. Sipping on a glass of wine, perched on a banquette with three devices plugged into electrical outlets built into the seat, Patel is not actually a guest at the hotel. He says his "is a young, growing company and I can't afford the $300 a night" that Hilton charges. So he stays at less expensive hotels nearby to sleep and then plugs in at the Hilton to work and take meetings. He gives the hotel his food and beverage dollars in exchange for its hospitality.
A block away, at the bar in the Parc 55, four Australian tech executive were brainstorming. John Craig of Brisbane, says he also "loves" the Tenderloin location. "The [nightly room] rates are great. Food's good. The rooms have plenty of space and plugs for working. And for us, all the new start-up companies around here are future customers."
Patel's room-rate concerns notwithstanding, the two Hiltons a block apart can be a bargain. With citywide conventions down sharply this year, rates seem softer than 18 months ago. I didn't encounter anyone paying more than $330 a night at either hotel. Actually, $222 nightly seems a commonly offered rate for the two hotels.
Manchun, the hotel's sales and marketing chief, wouldn't discuss pricing strategies, however. All he'd confirm is that room rates range from $159 to $759 a night depending on demand.
But there seems to be no shortage of space for Hilton brand loyalists. With one sales team selling both hotels, Manchun explains, "if one hotel is full, the other usually has rooms."
This column is Copyright © 2016 by Chris Barnett. JoeSentMe.com is Copyright © 2016 by Joe Brancatelli. All rights reserved. All of the opinions and material in this column are the sole property and responsibility of Chris Barnett. This material may not be reproduced in any form without his express written permission.