S.F. Hotels Cut Rates to Lure Tourists Back

Room rates at even luxury hotels are falling fast as hoteliers find the traditionally slow winter months even more sluggish than usual in the wake of the October earthquake.

The San Francisco Chronicle reported today that rates at many inns have been slashed by 20% to 40%, and more in some cases.

Observers cite tourists’ fears of another earthquake such as the one Oct. 17 that killed 67 people in the San Francisco Bay Area, and an oversupply of hotel rooms.

The number of hotel rooms in San Francisco increased 7% last year to 27,600, while occupancy rates dropped to about 70%, the break-even point for the average hotel. And an additional 1,400 rooms are scheduled to come on the market later this year.

Hotel officials say business in January and February slipped as much as 10%.

As a result, the Mark Hopkins hotel cut rates 43% to $99 for a limited number of rooms during the last few months, and is offering spring discounts for the first time. The Sheraton at the Wharf is offering double-occupancy rooms at $95 a night, rather than its regular $120.

“The competition is so fierce that I’m seeing rates for weekdays that used to be reserved for weekends only,” said Stan Streeter, a hotel analyst with the accounting firm Pannell Kerr Forster.

Even so, discounts haven’t done enough.

HBR Hotels, owner of five San Francisco hotels whose revenues have dropped about 7%, has changed the way it spends its $120,000 quarterly marketing budget, opting for brochures targeting Japanese tourists.