SAN JOSE — The estimated value of a bankrupt and shuttered hotel that is an icon in downtown San Jose has slipped, fresh evidence of the economic damage unleashed by the coronavirus on the battered lodging sector.

The owner of the downtown hotel,  the Fairmont San Jose, filed for bankruptcy in March 2021 in an effort to reorganize its shattered finances, a court case that is approaching an apparent endgame. Sometime in July, a U.S. Bankruptcy Court is slated to decide whether to confirm a proposed plan to overhaul the downtown San Jose hotel’s finances.

The resolution of the court case could lead to a reopening of the hotel sometime this summer.

Located at 170 S. Market St. in San Jose, the Fairmont closed its doors last March, around the same time its owner filed for bankruptcy.

When the hotel reopens, it’s expected to have a new operator and eventually a new name. The hotel’s owner has picked Hilton Hotels & Resorts to be the operator. Hilton submitted a winning bid to become the operator.

“The Hilton bid contemplates that the hotel will assume the name ‘Signia by Hilton San Jose’ or another name that includes ‘Signia’ in it and that it will be managed by Hilton upon its reopening,” bankruptcy court records show.

Separately, the value of the 805-room San Jose hotel has tumbled, according to an appraisal conducted around the time of the bankruptcy filing.

The slumping value of the hotel is a reminder of one of the many ways the coronavirus has eviscerated the lodging market, especially for hotels that depend on conventions and business travelers.

Prior to the outbreak of the coronavirus, an appraisal in June 2019 placed the Fairmont San Jose’s value at $267.6 million, or roughly $332,400 a room.

In March 2020, an appraisal by LW Hospitality Advisors came up with a value of $261 million, or approximately $324,200 a room for the downtown San Jose hotel.

The most recent known appraisal, conducted on behalf of the principal mortgage lender for the hotel, an affiliate of Colony Capital, determined that the hotel as of March 2021 was valued at $220.4 million, or $273,800 a room, according to information compiled by Trepp, which tracks and analyzes real estate and finance trends.

“What we are seeing is the COVID effect on hotels,” said Alan Reay, president of Atlas Hospitality Group which tracks the lodging market in California. “We are seeing some 25% reductions in value for some hotels.”

In the case of the Fairmont San Jose, the hotel’s current appraised value has fallen 15.6% compared to what it was in March 2020, at the outset of the coronavirus, and is down 17.6% compared with what it was in mid-2019, which was months before the outbreak of the deadly bug.

Plus, the approximate per-room value stands in stark contrast to the prices being commanded by hotels located in California’s top destinations for leisure travelers.

Among the mega-deals for California hotels — which all are in big-time tourist centers:

— Ventana Big Sur, a 59-room resort tucked away in the coastal mountains high above the Pacific Ocean in Monterey County, was bought on June 3 for $148 million by Hyatt Hotels. That worked out to a jaw-dropping $2.51 million a room — or 11 times the per-room appraised value of the Fairmont San Jose.

In April 2021, the Montage Healdsburg, a 130-room hotel in Sonoma County, was bought for $265 million, or $2.04 million a room.

In 2019, Montage Beverly Hills, a 201-room hotel was bought for $415 million, or $2.06 million a room.

The Ventana Big Sur deal represents a record high price on a per-room basis for a California hotel, according to Reay.

The hotels facing the biggest challenges are those that are similar to the Fairmont San Jose, as well as the vast majority of hotels in the South Bay, San Francisco, the East Bay, and Los Angeles.

“The Fairmont San Jose is a big property, and it’s heavily reliant on the conventions and meeting business and on business travelers generally,” Reay said.

These challenges will persist even if the hotel manages to secure court approval of its financial reorganization and to reopen this summer as envisioned.

“Convention and business travel hotels will be the last sector of the hotel market to recover,” Reay said. “You don’t just suddenly flip the switch and come back to meetings and conventions for 1,000 people.”