Park Hotels & Resorts, the operator of two of probably the most outstanding inns in San Francisco, is handing within the keys on the properties — and, in essence, giving up on a metropolis that has fallen on hard times.

Park Hotel stopped making funds on a $725 million mortgage tied to the Hilton Union Square and Parc 55, the true property funding belief said on Monday. The inns, just a few blocks from the once-bustling Moscone Center convention corridor, have a mixed complete of almost 3,000 rooms.

A slowing financial system and a remote-work thunderclap have emptied workplaces throughout the nation, with some warning of a ticking bomb in the commercial real estate market. Slammed by a wave of layoffs within the tech trade and a steep slowdown in Moscone’s convention calendar, downtown San Francisco has been hit onerous.

“Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges” that may scale back demand for enterprise and leisure journey, stated Thomas J. Baltimore Jr., the chief govt of Park Hotels & Resorts.

The firm beforehand warned buyers it was weighing choices for the mortgage and informed analysts final month that the properties contributed solely a small quantity towards its 2023 steerage.

Shares of Park Hotels & Resorts rose almost 3 % in afternoon buying and selling on Tuesday. The firm’s portfolio of 46 properties consists of Hiltons in Chicago, Honolulu, Midtown Manhattan and San Diego.

The abrupt departure of Park Hotels & Resorts is elevating fears that others might comply with go well with. San Francisco is highly dependent on business travel, which has but to return to prepandemic ranges. JPMorgan Chase introduced again its annual well being care convention this 12 months, however different occasions have moved out, together with VMWare’s tech convention.

Not everyone seems to be giving up. “We’re not writing San Francisco off,” James Risoleo, the chief govt of Host Hotels & Resorts, dad or mum firm of the Marriott Marquis San Francisco, informed analysts in May.

“I have concern about how the market is performing relative to 2019 and what happened with the layoffs in the world of tech and the like, and return to office in that market is really lagging the rest of the country,” he stated. “But it is the center of tech and it’s going to be the center of artificial intelligence as the world returns.”