Oakland's economic woes deepen as Marriott City Center defaults on loan
As basketball fans from around the world flock to the Bay Area to enjoy NBA All-Star Weekend festivities, the city of Oakland is grappling with another major economic setback.
The Marriott City Center, Oakland's largest hotel located on Broadway, has defaulted on its loan, putting the property at risk of foreclosure. The news follows the closure of two other major hotels in the city in the past six months, signaling a broader economic crisis.
The Marriott City Center has been a staple in the Oakland skyline for decades, welcoming visitors from across the globe. The hotel was also once home to the Golden State Warriors practice facility before the team moved to San Francisco.
Ronald Wysinger, an Oakland native and violence prevention worker, expressed his disappointment with the city's struggles.
"It's frustrating, yes. It frustrates everyone out here," Wysinger said.
He was giving a tour of the city to two visitors from Indianapolis as he discussed the financial troubles facing the Marriott. Wysinger believes the hotel's issues reflect broader economic challenges in Oakland, compounded by the city's negative image.
"I'm not sure why we're not getting a lot of visitors to come to Oakland. Oakland is getting a bad rap," he said.
Wysinger's two guests, Beatrice Beverly and Josette Robinson, were staying at the Marriott for a convention focused on the city's efforts to combat crime. Despite the hotel's financial woes, both visitors praised their experience.
"All the staff and everyone is friendly. And even the guests coming in are very friendly," said Beverly.
"It's amazing. I love the amenities. Great restaurants. Yes, it's wonderful," Robinson added.
However, the hotel is struggling to meet its financial obligations. Gaw Capital, which owns the Marriott, purchased the full-service hotel in 2017 for $143 million and took out two loans totaling $100 million. The company did not respond to CBS News Bay Area's requests for comment.
Industry experts point to a decline in visitors as one of the main factors behind the hotel's financial difficulties.
Phil Tagami, CEO of California Capital & Investment Group and a commercial real estate expert in Oakland, attributes the decline in tourism to safety concerns.
"The number one contributor to this marketplace and specifically this situation is probably crime," Tagami said. "It's disheartening. But I will say that hopefully the message is also twofold, which is maybe there is an opportunity there for someone."
The news of the hotel's loan default comes as the city hosts NBA fans for All-Star Weekend, an event that typically boosts the local economy. However, Alan Reay, president of Atlas Hospitality Group, a hotel brokerage and consulting firm, points out that the challenges in Oakland go beyond the pandemic effects hurting hotel industry.
"With the homeless situation as well as the crime, it is very, very difficult now to attract larger firms to do conventions," Reay said. "And then on the added side with Oakland is the loss of major professional baseball and football teams."
These factors have contributed to the recent shutdown of the two other Oakland hotels, the historic Waterfront Hotel at Jack London Square and the Hilton near the Oakland International Airport.
Wysinger remains hopeful for the future of his city. "We've just got to keep hope alive and we shall overcome," he said, acknowledging the need for Oakland to attract more investment and create a safer environment for both residents and visitors.
Real estate experts predict that Gaw Capital will likely hand the Marriott hotel back to the lender, who would then appoint a receiver to keep the hotel operating while seeking a new buyer. The outcome of the Marriott's financial troubles could play a significant role in shaping the future of Oakland's hotel and tourism industries.
Visit Oakland President and CEO Peter Gamez released a statement that read in part, "It is difficult to witness our Oakland properties experiencing financial struggles. Like everyone in these situations, we had hoped to see full recovery in our city much sooner. This does not mean it will not happen. Times can be difficult, but Oakland is strong and resilient. We are confident that there are many people who continue to invest in the value of our location, local assets, and inspiring community."
