By: TTW News Desk

Berkeley, a city known for its academic legacy and vibrant cultural scene, has not been immune to the struggles that have beset the hospitality industry in the Bay Area. Since the pandemic, the local hotel market has faced a range of challenges, from a decline in demand to rising operational costs. However, while several hotels have closed their doors or filed for bankruptcy, there are signs of resilience in Berkeley’s hotel industry. The city’s steady recovery, aided by its unique position as a college town, provides an interesting perspective on how some areas are faring better than others in the region.

Soft Demand and Rising Costs Impact Berkeley’s Hotel Market

The aftermath of the pandemic has left a significant mark on the global tourism industry, and Berkeley’s hospitality sector has not escaped its effects. Like many cities, Berkeley has seen softer demand for hotel rooms, as travelers continue to navigate concerns over safety, convenience, and cost. The double impact of reduced demand for both business and leisure travel, coupled with rising costs for essentials such as labor and supplies, has made it increasingly difficult for local hotels to remain profitable.

While Berkeley’s hotel tax revenues have dropped, they have not suffered the same dramatic losses as those seen in other parts of the Bay Area. Still, some of the city’s largest hotels have faced serious financial challenges. For example, the DoubleTree by Hilton, the largest hotel in Berkeley, located at the waterfront, faced financial turmoil after ceasing rent payments on its city-owned property earlier this year. The property was reportedly at risk of defaulting on a $48.3 million loan, underlining the pressures many hotels face as they attempt to recover from the pandemic’s economic toll.

The University Inn and Suites in West Berkeley, another local hotel, declared bankruptcy in June, highlighting the difficulties small and mid-sized hotels are experiencing. This follows a trend seen across the country, where hotels that rely on a combination of transient business, convention traffic, and tourism are feeling the strain. A more significant concern for Berkeley was revealed in May when it was disclosed that several large hotels had stopped paying their nightly room taxes. This issue has contributed to a shortfall in the city’s hotel tax revenues, which fell below pre-pandemic levels.

Despite these setbacks, Berkeley’s hospitality sector has shown surprising resilience. While hotel occupancy rates in the first half of 2025 were consistently lower than in 2019, the city’s hotel revenues have remained relatively stable. This has been attributed to the consistent flow of visitors, drawn in part by Berkeley’s prominent position as a college town and its proximity to major Bay Area attractions.

Shifting Hospitality Landscape in Berkeley

Berkeley’s unique identity as a college town has played a crucial role in its ability to weather the storm. While larger cities like San Francisco and Oakland have been plagued by significant declines in convention business and corporate travel, Berkeley has maintained a steady stream of visitors related to the University of California, Berkeley. This steady influx of students, academics, families visiting students, and faculty has provided a buffer against the broader declines seen in the hotel industry. The consistent demand from these visitors has helped local hotels maintain a relatively stable revenue base, compared to other parts of the Bay Area.

Moreover, Berkeley has also seen some growth in its hotel inventory. The addition of the Residence Inn in downtown Berkeley in 2021 has helped offset the losses from the closure of some older hotels. The Residence Inn, with its extended-stay accommodations, has contributed to an increase in the number of available hotel rooms in the city. As a result, Berkeley’s total hotel room inventory has grown slightly, from 1,471 before the pandemic to 1,514 rooms today. This growth in room availability has helped ensure that the city is not entirely dependent on any single sector of the hospitality industry.

However, not all hotels in Berkeley have remained open. The Bancroft Hotel, a historic building located across from the UC Berkeley campus, closed its doors after its owner sought city approval to convert the property into student housing. This trend of repurposing hotels for non-tourism uses reflects broader shifts in the region’s hospitality market, as hotels increasingly compete with short-term rental platforms like Airbnb and other alternative accommodations.

The Impact of Rising Costs on Berkeley’s Hotel Industry

As with other parts of the Bay Area, Berkeley’s hotels are grappling with rising costs that have put pressure on their profitability. These costs have been exacerbated by inflation, particularly in labor, insurance, and supply chain disruptions. The increased cost of doing business has made it more difficult for hotels to remain competitive, especially for mid-range and lower-tier properties. For example, the rise in labor costs has made it harder for hotels to maintain their operations without increasing prices, which could deter budget-conscious travelers.

The increase in costs also makes it difficult for local hotels to remain competitive with alternative accommodations such as Airbnb, which often offer lower prices and more flexible options for travelers. This shift has made it harder for hotels to maintain occupancy rates, and many have had to adjust their business models to meet the changing needs of travelers. Some hotels, like the Residence Inn, have adapted by targeting longer-term stays and offering special pricing for student accommodations, reflecting a broader trend in the market toward more flexible, affordable travel options.

Tourism Recovery in Berkeley: A Steady, Long-Term Process

While other parts of the Bay Area have seen slower recoveries, particularly in the San Francisco and Oakland markets, Berkeley’s tourism industry has shown a steady rebound. The city has benefitted from its unique position as a hub for academia and culture, as well as its status as a more affordable alternative to some of the region’s more expensive tourist destinations. Berkeley’s tourism office, Visit Berkeley, has focused on leveraging these advantages to position the city as a desirable destination for visitors from across the globe.

One of the key factors driving Berkeley’s recovery has been its growing reputation as a welcoming city for a diverse range of travelers. Visit Berkeley’s marketing campaigns have focused on attracting visitors from Mexico and Canada, as well as LGBTQ+ travelers seeking a progressive, inclusive destination. This shift in focus reflects the city’s progressive values and its emphasis on creating an environment where all visitors feel welcome.

Additionally, Berkeley has capitalized on its cultural assets, including its proximity to the UC Berkeley campus, the Lawrence Berkeley National Laboratory, and a host of outdoor activities in the surrounding areas. These attractions, combined with the city’s vibrant dining scene and eclectic neighborhoods, make it an appealing destination for tourists seeking both culture and relaxation.

Berkeley’s Hotel Industry: A Model of Resilience Amid Broader Struggles

Despite the challenges posed by the pandemic, rising costs, and soft demand, Berkeley’s hotel industry has demonstrated resilience. The city has not experienced the steep declines in hotel revenues and occupancy rates seen in nearby cities like San Francisco and Oakland. While there are still obstacles to overcome, the steady flow of visitors and the diversification of the city’s hotel offerings suggest that Berkeley is on a path to sustained recovery.

The situation in Berkeley’s hospitality market offers valuable lessons for other cities grappling with similar challenges. By leveraging its unique position as a college town, focusing on sustainable tourism, and adapting to the changing needs of travelers, Berkeley has been able to navigate the post-pandemic landscape more effectively than many other regions in the Bay Area.

As the tourism sector continues to evolve, Berkeley’s ability to adapt to new trends, from student accommodations to alternative lodging options, will play a key role in ensuring the long-term health of its hotel industry. By focusing on inclusivity, sustainability, and cultural tourism, Berkeley is positioning itself as a key player in the future of Bay Area tourism.

Conclusion

Berkeley’s hotel industry, like much of the Bay Area, faces ongoing challenges as it recovers from the impacts of the pandemic. Rising costs, soft demand, and increased competition from alternative accommodations have put pressure on the local hospitality sector. However, the city’s unique position as a college town, combined with its focus on sustainable and inclusive tourism, has allowed it to weather the storm more effectively than other regions. With steady recovery and a focus on attracting diverse visitors, Berkeley’s hotel industry is poised for a bright future.