SFO’s Hyatt hotel plan advances toward approval

San Francisco International Airport’s plan to build a four-star hotel managed by Hyatt advanced to the full board Wednesday despite opposition from Fairmont Hotel operators who narrowly lost out on the deal.

In a 2-0 vote, the Board of Supervisor Budget and Finance Committee approved the $230 million 350-room airport hotel. The airport has not had an onsite hotel since the Hilton Hotel was demolished in 1998 to make way for freeway ramps.

As airport business is booming as well as the economy, the airport will finance the construction through
revenue bonds. The Airport Commission approved the proposal in September.

Among the Fairmont’s objections was that the bid requirements disqualified hotel operators who operated a four-star hotel within a 10-mile radius. Hyatt has what it says is a three-star hotel within 10 miles in Burlingame.

Supervisor Eric Mar echoed some of the concerns. During the hearing, Mar said he was looking at the Hyatt’s website, which noted the Burlingame hotel had four stars.

But airport director John Martin and Pete Sears, president of Americas of Hyatt Hotels, said the hotel is a three-star facility and the information Mar was looking at was “old legacy pages” on the Internet. Hyatt, which will contribute $5 million to the construction of the hotel, is due to receive $20 million over ten years to manage the hotel.

“I very much stand behind the fairness of the process,” Martin said. He added that he had “waited a long time” to finally build a hotel which “a world class airport should have.”

Tom Klein, regional vice president of Fairmont Hotels, said having two Hyatt hotels in close proximity “will compete and it will be at the financial detriment of The City.”

But Martin refuted the claim. He noted that they negotiated a provision with Hyatt that room rates must have a 35 percent differential between the Hyatt at the airport and the Hyatt in Burlingame, which provides them with “financial protection.”

“I still have questions about the process,” Mar said. “But I am not going to second guess Mr. Martin and the Airport Commission.”

Supervisor Katy Tang was decisive. “Through the briefings that I have received, I do believe that it was a fair process,” Tang said.

Supervisor Mark Farrell, who chairs the committee, recused himself from the vote because “an employee of Hyatt actually serves in an advisory capacity for a business outside of City Hall that I am involved in.”

The full board is expected to vote on the deal Dec. 1.

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