SAN JOSE — The new manager of a downtown San Jose hotel that has emerged from bankruptcy faces challenges and opportunities amid lingering side effects of the coronavirus.
With a plan approved and in place to revamp the finances of the Fairmont San Jose, the next major steps for the property will include reopening the lodging and the official rebranding of the hotel as Signia Hilton San Jose.
The prominence of the Hilton name could bolster the hotel’s fortunes when it begins operations as a Signia hotel, according to Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market.
“If you are measuring Hilton’s name against Fairmont’s name, Hilton with its worldwide presence and sheet number of properties far outweigh the Fairmont name recognition,” Reay said. “Internationally and domestically, Hilton is a stronger brand and stronger name than Fairmont.”
Still, the management of the new Signia Hilton San Jose will face considerable challenges to restore the 805-room hotel to top-notch financial status.
That’s because the full-service hotel, located just down the street from the San Jose Convention Center, has traditionally catered to business travelers. The coronavirus has devastated business travel and conventions.
“The business market for hotels is definitely very much lagging the drive-to and leisure hotel markets,” Reay said. “You can’t flip a light switch and say you are going to have a conference next week for 2,000 to 3,000 people.”
Plus, the onset of the COVID-19 delta variant has spooked the convention sector, reminiscent of what the original deadly bug did throughout 2020.
“With the amount of new COVID cases and the delta variant emerging, I’m already seeing conferences pulling back, delaying events to 2023 or 2024,” Reay said.
What does seem to be certain is observers are eager to see the hotel operating again in downtown San Jose.
The hotel shut its doors in March when its owner, a group led by Bay Area business executive Sam Hirbod, filed for bankruptcy to restore its shattered finances. The hotel’s closure has jolted efforts to revive downtown San Jose’s vitality.
“This means a lot to get the hotel reopened,” said Scott Knies, executive director with the San Jose Downtown Association. “The hotel was a marquee project when it opened in 1987.”
Erik Hayden, founder and managing partner with Urban Catalyst, an active developer in downtown San Jose, believes that a new Signia Hilton will make a big difference for the central business district.
“It’s extremely important to have Hilton take this over and that the hotel can get back to being one of the icons and one of the stalwarts of downtown San Jose as it has been for the last 30 years,” Hayden said.
When the hotel opened in 1987, it was viewed as a game-changer for the downtown.
“The hotel was of a quality that San Jose hadn’t seen before,” Knies said. “It really elevated San Jose’s game.”
Despite the uncertainties, Reay believes Hilton has a decent chance to make a go of it with its new management endeavor.
“Hilton looks at this as a once-in-a-lifetime opportunity to get into the heart of Silicon Valley with a trophy asset,” Reay said.
The business sector of the hotel market could still be two years — or more — from full recovery, but Reay believes Hilton’s patience would be rewarded.
“As long as Hilton is looking at this long-term, this hotel is going to do very well for them,” Reay said. “The lodging market is going to take a while to come back, but when it does, Hilton will be able to say they’ve got this great hotel that is performing exceptionally well.”