Fairmont protests Hyatt running SF airport’s proposed $250M hotel

The San Francisco International Airport’s $250 million hotel is pending approval by the Board of Supervisors, but who manages the hotel remains subject to dispute.

While the deal appears pretty straightforward, behind the scenes there is a fight between the operators of the Fairmont and the Hyatt hotels. The Hyatt was selected among 11 hotel chains to manage the hotel, but the Fairmont, which came in second, has protested the bidding process.

That has put the debate before the Board of Supervisors.

The board’s Budget and Finance Committee postponed a vote on the deal last week but planned to revisit the issue Nov. 18.

Committee members Mark Farrell, Katy Tang and Eric Mar were pretty tight-lipped about the dispute Friday. “I’m going to continue to look at the issue,” Farrell said. Mar said via text “I just want to make sure the process was a fair one.”

Mike Casey, a leader of Unite Here Local 2, a hotel workers union, is involved in the talks. He did not return calls for comment.

Unite Here Local 2 spokesman Ian Lewis said the union has not taken a position on the management deal. “If they build a hotel there it will be a very lucrative project for the airport and whoever manages it,” Lewis said. “There are a lot of different opinions about which brand would be best for The City’s interests there.”

The Unite Here union and the Chicago-based Hyatt chain have had a strained relationship in San Francisco and beyond over the years with the union boycotting Hyatt hotels over the right to organize and other employee issues. The Hyatt brand is already represented in the area with the Hyatt Regency in Burlingame.

The Fairmont has argued the Hyatt should have been excluded from the bid because its criteria had prohibited those with hotels within a 10-mile radius of the airport but the City Attorney said the Burlingame Hyatt is a three star hotel and the restriction had only applied to four star hotels.

Fairmont owner, Los Angeles-based Woodridge Capital Partners, which also owns the neighboring hotel on Nob Hill the Mark Hopkins, did not return requests for comment.

Hyatt isn’t commenting on the specific deal. “We are interested in increasing our brand representation in San Francisco and we are actively pursuing opportunities to do so,” said Hyatt spokeswoman Stephanie Sheppard. “That said, it is our practice only to discuss transactions or potential deals once an agreement has been executed.”

The $250 million project, which includes a $15 million AirTrain station, would total $466 million with interest on the debt over a 40 year period, according to budget analyst Harvey Rose’s report. From a financial viewpoint, Rose has recommended approval.

Under the terms of the deal, the airport will pay the Hyatt Corporation to operate the hotel $20 million over a decade to manage the hotel, but the Hyatt will contribute $5 million to the construction costs. The hotel, which could open in 2019, is expected to generate 404 part time and full time jobs with room rates at about $300.

There are 13 other airports with onsite hotels and three more in development. The San Francisco airport previously had a hotel but the 527-room Hilton Hotel was demolished in 1998.

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