Hotel Losses Mount, Hurting San Francisco's Coffers

The San Francisco Chronicle reports:

After two notable and high-end San Francisco hotels defaulted on large loans last month, the city's hotel economy - a key contributor to municipal coffers - has only become bleaker.

On July 8, owners of the stately, 97-year-old Renaissance Stanford Court on Nob Hill defaulted on an $89 million loan. Three weeks later, the glitzy Four Seasons Hotel, built on Market Street in 2001, withheld payment on $90 million it owed.

The explanation for the ailing hotel industry is straightforward: High unemployment and job insecurity have meant that patrons aren't willing to pay as much as they have in recent years. 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, according to PKF Consulting, which tracks hotel industry trends.

Can you say deflation of room rates?