SAN JOSE — The Signia by Hilton hotel, a downtown San Jose icon, is up for sale in a deal that may produce a diagnosis about the Bay Area lodging market’s health in the wake of coronavirus-spawned economic afflictions.
The sale efforts involve the 541-room hotel tower at 170 South Market Street, which is the one-time northern tower of the former two-tower hotel complex in downtown San Jose.
Just a few weeks ago, the 264-unit former south tower of the hotel was bought by a Bay Area real estate firm that intends to convert the facility to housing for San Jose State University students.
Mill Valley-based Throckmorton Partners, acting through an affiliate, paid $73.1 million to buy the southern tower of the Signia by Hilton San Jose.
Now, the stage is set for both of the hotel towers to land new owners.
The lodging unit of CBRE, a commercial real estate firm, is circulating a sales brochure that has been provided to this news organization.
“CBRE Hotels is pleased to offer, on an exclusive basis, the opportunity to acquire the landmark hotel property for downtown San Jose and Silicon Valley, the Signia by Hilton San Jose,” the real estate lodging brokerage’s marketing packet states.
A potential offering price for the downtown San Jose hotel wasn’t immediately available. Sam Hirbod, a Bay Area business executive who bought the hotel in 2018.
“The hotel benefits from its proximity to the market’s primary demand generators, including the San Jose McEnery Convention Center, San Jose State University, SAP Center at San Jose, the San Jose Museum of Art, and the Tech Museum of Innovation,” the brochure states.
In addition to the guest rooms, the lodging tower contains a completely renovated lobby and check-in area, along with a revamped pool and cabana section.
Four food and beverage outlets and 55,000 square feet of meeting spaces are also key features of the hotel.
In 2018, a group headed up by Bay Area business entrepreneur Sam Hirbod paid $223.5 million for what was then a two-tower, 805-room hotel.
Like many other lodging facilities in the nine-county region, the downtown San Jose hotel, then known as the Fairmont San Jose, enjoyed robust occupancy levels and business conditions in 2018 and 2019.
The arrival of the coronavirus in 2020, however, prompted state and local government agencies to impose wide-ranging business shutdowns, draconian restrictions that chased away hotel guests at a time when the global travel markets nosedived and left hotels nearly empty.
The hotel’s financial woes turned brutal and in 2021, the hotel tumbled into bankruptcy and closed its doors.
In 2022, the hotel became a Signia by Hilton and resumed operations after it emerged from bankruptcy.
By some measures, the Signia Hilton is turning in a better financial performance than it produced in 2019, the final full year before the onset of the coronavirus outbreak. These hopeful trends are contained in the marketing brochure that CBRE Hotels is circulating.
The affiliation with Hilton and the hotel’s renovation are among the major factors that have fueled the upswing in the hotel’s financial fortunes.
“2023 banquet and catering revenues will surpass 2019 levels by almost 10%,” the marketing package states. “Food and beverage profit margin has moved from 9% in 2019 to over 40% in 2023. Even the RevPar index over the last six months has achieved the same level as it was in 2019.” RevPar, or revenue per available room, is the most widely accepted benchmark that industry experts use to measure the financial health of a hotel.
The CBRE brokers also believe multiple opportunities exist to improve the hotel’s operations and positioning in San Jose’s urban core.
“The property’s ground floor can be repositioned to leverage its place as the focal point of downtown San Jose, including activating underutilized spaces such as the restaurant on South First Street, the ground floor spa area, retail spaces and Club Regent,” the CBRE marketing package states.
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