San Francisco selects Hyatt to manage airport hotel

San Francisco’s planned $250 million airport hotel will become part of the Hyatt chain.

Despite an effort by the Fairmont Hotel operators to kill the deal, the Board of Supervisors unanimously approved the proposal Tuesday. The San Francisco International Airport will construct the 350–room, four–star hotel and have Hyatt manage it for $20 million over a 10–year period.

The vote came after a series of questions by board members directed at airport Director John Martin about hotel star ratings and financial concerns.

The Hyatt was selected through a competitive bidding process among 11 hotel chains to manage the hotel. The Fairmont, which narrowly lost, unsuccessfully protested the bidding process and attempted to convince the board to scrap the deal.

Among the contention was a dispute over the star–rating for the Hyatt’s Burlingame hotel. The bid prohibited any hotel operator from bidding if they operated a four–star hotel within 10 miles of the airport. Hyatt’s Burlingame hotel is within 10 miles, but is a three–star hotel.

Fairmont operators pointed to various sources suggesting the hotel was really a four–star hotel. They also warned that San Francisco having two hotels by a single operator could impair the financial return for The City’s hotel investment.

Some members of the board pointed to documents and websites showing the hotel was advertised as a four–star hotel.

Board President London Breed said during the meeting she was “still a little concerned” about the proposal, specifically about issues
of “false advertising” as it relates to the star-rating.

But no matter what old website pages or even personnel at the Hyatt have said, Martin said that since 2007 the Burlingame Hyatt has been a three–star hotel.

“It has been that for eight years. We have verified that,” he said. “We follow the triple AAA published data, which we have followed and we have verified.”

Supervisor David Campos said he was wary of selecting a hotel operator with a competing hotel site that close to the airport. But Campos said out of “respect for the director” he would vote in favor of it.

“You are recommending this,” Campos told Martin. “I am willing to support it.”

Supervisor Mark Farrell was recused from the vote. He previously noted that a business he was involved in outside of City Hall has an advisor who works for Hyatt.

Martin said that a provision in the contract ensures The City will not suffer financially from competition with the other Hyatt.

“We negotiated a 35 percent room rate differential between the Burlingame property and the airport property,” Martin said. “If we don’t receive at least 35 percent more on average per room night, Hyatt loses their management contract.”

He added, “That 35 percent provides the airport with the protection we need.”

The hotel is expected to become operational in 2019. The airport hasn’t had a hotel since the Hilton Hotel at the airport was demolished in 1998.

The $250 million hotel includes a $15 million AirTrain station, and with interest on the debt would total $466 million during a 40–year period, according to budget analyst Harvey Rose’s report.

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