Berkeley’s college-town identity has helped shield the city from the worst impacts of a hospitality downturn that has battered hotels around the Bay Area. But a string of gloomy stories shows the city isn’t immune from the struggles the hotel industry has faced since the pandemic upended travel.

The biggest hotel in Berkeley, the 378-room DoubleTree by Hilton on the waterfront, stopped paying rent for its city-owned property early this year, and the real estate news site The Real Deal reported it was at risk of defaulting on a $48.3 million loan. The University Inn and Suites in West Berkeley declared bankruptcy in June, the Mercury News reported, a few months after defaulting on a $10.5 million loan.

Staff in Berkeley’s finance office also revealed in May that two large hotels — the city has refused to say which ones — stopped paying their nightly room taxes during the last fiscal year, further reducing hotel tax revenues that are below pre-pandemic levels.

Meanwhile, there have been signs that the industry isn’t as attractive as it once was: The city has acquired six motels and hotels through state programs that provide funding for local governments to convert commercial lodging into housing for the homeless. The Bancroft Hotel, across from UC Berkeley, closed its doors not long after its owner sought city approval to convert the historic building into student housing. And the Residence Inn Berkeley, the 16-story hotel that opened downtown in 2021, also made a play for the housing market: Until recently, it advertised room plans aimed at Cal students that ranged from $999 per month to share a one-bedroom suite with three roommates to $3,999 to have one all to yourself.

The Bay Area has had a slower pandemic recovery than any other large hotel market in the country, according to the real estate analytics firm CoStar. And data from Visit Berkeley, the city’s tourism office, show occupancy rates for hotel rooms during the first half of 2025 were consistently lower than the same period in 2019. 

But Visit Berkeley officials say the city is faring better than others around the region: Berkeley hotels’ nightly rates are higher than they were before the pandemic, and overall revenues are about even with pre-COVID figures.

“Berkeley is doing relatively well,” Visit Berkeley CEO Jeffrey Church said. “We do have a consistent flow of people coming in.”

Bay Area hotels struggling

None of Berkeley’s four largest hotels were interested in talking about how business is going these days — representatives for the DoubleTree, Residence Inn Berkeley, Hotel Shattuck Plaza and Graduate by Hilton Berkeley all either declined interview requests or didn’t respond to them. (The Claremont Resort and Club has a Berkeley address, but is actually across the border in Oakland, and pays its taxes there.)

Adrian Larick, a spokesperson for the Residence Inn Berkeley, wrote in an email that the hotel is no longer offering student housing, but would not say whether it had leased rooms to tenants in the past. Staff from the Berkeley Rent Stabilization Board said the hotel has not registered any housing units with the city, which would have been required if any were rented for 14 days or longer.

Data from CoStar show revenue per available room, a core metric in the industry, is down 29% compared to 2019 in the Oakland market, which includes Alameda and Contra Costa counties. It has fallen 25% in the San Francisco market, covering portions of San Francisco, Marin and San Mateo counties.

Michael Stathokostopoulos, CoStar’s senior director of hospitality analytics, said there are several reasons for those declines. Years of negative national press about San Francisco has deterred tourists and organizers of major conventions, Stathokostopoulos said, while corporate travel still hasn’t returned to pre-pandemic levels. Those factors, he said, have been magnified on this side of the bay, where anxiety about crime and the departure of three Oakland sports teams has further reduced demand.

“Some of these demand drivers have not been back to where they were,” Stathokostopoulos said.

Experts hoped international tourism would complete its pandemic recovery this year, but it has instead slumped under the Trump administration, as people view the United States as more hostile and Canadian travelers in particular skip American vacations. Stathokostopoulos said mid-range and lower-tier hotels have especially been hurting as less-wealthy domestic travelers look to save money by taking cruises or booking cheaper short-term rentals on platforms such as Airbnb.

“They have been feeling the pressures of inflation and high costs, and they have been looking for other ways to travel,” he said.

On top of softer demand, hotels have also faced rising costs for labor, insurance and supplies, further cutting into margins.

Two hotels stiffed Berkeley on tax payments

The softer hotel market has financial consequences for Berkeley: The city took in just shy of $7 million from its nightly room tax in the 2024 fiscal year, which was down from $7.5 million the year before and about $1 million less than it made from the tax in 2019. 

Finance officials projected revenue from the tax would rise to $7.7 million the 2025 fiscal year, which ended June 30. But as city leaders grappled with a budget deficit this spring, finance staff warned in a report to the City Council that revenue from the “transient occupancy tax” was coming in lower than expected because one of the city’s largest hotels had not paid the tax for the past nine months, and another hadn’t paid in two months.

City spokesperson Seung Lee declined to identify the hotels in response to a Berkeleyside inquiry last month, writing in an email, “We cannot disclose taxpayer information.” Lee said one of the hotels has since paid its outstanding taxes, while the city was “working with” the other on payments, but declined to say whether that was the hotel with nine months of unpaid taxes or two.

Lee said hotel tax revenue figures from the most recent fiscal year were not yet available. The city projects revenue from the tax will stay flat through the middle of 2029.

Fewer ‘peaks and valleys’ in Berkeley’s recovery

Unlike cities that depend on conventions luring big crowds to their hotels, being home to a major university means Berkeley has a more dependable source of visitors. After all, it’s not like scientists headed to Lawrence Berkeley National Laboratory, or the thousands of family members who show up for move-in, graduation and move-out, could decide to go to Las Vegas instead. 

“We don’t have as many peaks and valleys,” Church said, meaning that in the wake of the pandemic, “We’ve been able to build back up consistently.”

Although several Berkeley hotels have closed over the past five years, the opening of the downtown Residence Inn has made up for those losses — the city’s total room inventory is up slightly, at 1,514, compared to 1,471 before the pandemic. There are 14 hotels and motels across Berkeley today.

Hospitality experts see reason for the Bay Area to be optimistic about the future. The market got a major boost in January when the NBA All-Star Game was held at Chase Center. Many hope that weekend was a preview of what’s to come next year, when Levi’s Stadium hosts the Super Bowl and World Cup games, which are expected to draw legions of visiting fans to the Bay Area.

The Trump administration’s efforts to slash research funding and target higher education could represent a threat to the academic travel that has insulated Berkeley from upheaval over the past five years. But Church said Visit Berkeley hasn’t seen any sign of that so far.

Instead, the tourism board is leaning into Berkeley’s progressive reputation, with ads that aim to attract queer travelers and visitors from Mexico and Canada. The pitch, in Church’s words: “Berkeley continues to be a welcoming destination for people from all over the world.”