In a blow to San Francisco’s hopes of economic recovery in 2022, J.P. Morgan has decided to take its major Union Square healthcare conference entirely virtual, citing concerns about the spread of the COVID-19 omicron variant.
San Francisco has the lowest return-to-office rate of any major U.S. city, according to key card entry data from Kastle Systems, and downtown merchants–as well as city tax collectors–are desperate for workers to return.
The J.P. Morgan event, scheduled to take place between Jan. 10-13, is one of the city’s largest annual business conferences, attracting around 20,000 attendees and translating to $51.7 million in economic impact, according to the city’s tourism agency.
Traditionally, thousands of venture capitalists, drug development executives, startup founders and media members and bankers descend on Union Square and the surrounding neighborhoods, paying thousands for hotel rooms in the area and competing for limited meeting space.
San Francisco’s hospitality industry has taken a beating from the pandemic and – in line with the progress of the city’s return to office – the local market’s recovery has lagged behind virtually all major metropolitan areas in the U.S.
According to data from STR, San Francisco’s hospitality market took the biggest hit in 2021 compared to all other major U.S. cities, earning only around 34% of its revenue compared to its 2019 numbers. Occupancy rates for the month of October dropped from 83.3% in 2019 to 46.7% this year, with average daily room rates also falling by more than 40% from $252.52 to $149.87.
SF Travel, the city’s tourism agency, said in a statement they were “very disappointed” in the bank’s decision to move to a virtual format, while understanding the company’s health and safety rationale.
“Given the current environment we are in, it is going to be a while until we see a full recovery in tourism. San Francisco is one of the safest places to meet in the U.S. given the city has one of the highest vaccination rates in the country. We strongly encourage everyone to get vaccinated and receive boosters as recommended by the CDC,” SF Travel’s statement said.
The news about the bank’s conference comes as the city updates its COVID-19 policies amid a new statewide indoor mask mandate that goes into effect Wednesday. The San Francisco Department of Public Health clarified late Tuesday that fully vaccinated groups will be allowed to keep their masks off in indoor settings like gyms and offices.
J.P. Morgan conference organizers said the decision was being made “out of an abundance of caution” and is meant to protect “the health and safety of our clients and employees.” The Centers for Disease Control and Prevention announced Tuesday that the omicron variant now represents about 3% of COVID-19 cases in the U.S. and said the proportion is expected to rise rapidly in the coming weeks.
The decision to go virtual represents an about face for J.P. Morgan and its CEO Jamie Dimon, who has been among the biggest proponents of a return to the office and face-to-face work.
Previously the company told companies that they would be required to present in-person at the event’s Westin St. Francis Hotel venue with no virtual option available.
But in response to the rising omicron threat, a number of blue chip companies in the healthcare space like Moderna and Amgen announced they would skip their presentations rather than sending employees in person, Stat News reported Tuesday.
The event may just be the first domino to fall as the new variant continues to spread.
“We would strongly assume some other 1Q22 events will also shift to virtual and/or have lower live attendance due to the variant,” Truist Securities wrote in an analyst note.
While the move to a virtual format might stymie some face-to-face time, some conference attendees say that the move is astute.
"One great lesson from this pandemic is just how much, and how well, we can do virtually, from events to healthcare. We agree with JPM's decision: it's time to stay smart and vigilant,” said Robin Glass, the president of San Francisco healthcare technology company Included Health. Last year’s conference was also held virtually.
Previous reporting from the San Francisco Business Times, said that J.P. Morgan had discussed taking the event virtual because of safety concerns after the spate of retail robberies in Union Square last month.
Business owners across the city were experiencing some whiplash around the new masking rules after the state order Tuesday appeared to require masks everywhere indoors, only for the city to clarify hours later that gyms and offices would be mostly exempt.
Dave Karraker, the co-owner of MX3 Fitness and a board member of the SF Independent Fitness Studio Coalition, quipped: “As a health professional, I’m not a big fan of whiplash, but in this instance I’m loving it.”
The initial change in the masking mandate in October that allowed vaccinated individuals to drop their face coverings at the gym was a boon for businesses like Karraker’s.
“Let’s face facts no one wants to work out with their mask on, particularly if you’re doing yoga and cardio,” Karraker said. “After the city dropped the masking requirements we saw a big boost and a surge of sign ups.
Karraker said that Dr. Susan Philip, San Francisco’s health officer, went to bat with state officials to keep the city’s masking exemptions because of San Francisco’s relatively high vaccination rates and low case counts.
While the “whiplash” led to some confusion for gym’s customers, Karraker said he was more concerned about how it may have disrupted some of the momentum the industry has seen after an incredibly challenging 21 months. He relayed the story of one local gym owner who saw 18 people suspend their memberships the day the new statewide mask order was announced.
“It came right before folks were making their New Year’s Resolutions,” Karraker said. “Gyms make up to 25% of their annual revenue in the first two months of the year, having anything that disrupts that could mean lost jobs and small neighborhood fitness studios going out of business.”
Kevin Truong can be reached at firstname.lastname@example.org