I wouldn't be worried about staying in Union Square, though near to some dodgy areas it's not a bad area, there are much worse. It's very popular, lively, with lots of hotels, shops, places to eat. Handy for the cable car. Great area for people watching. Only one sour note is the number of homeless /beggars which could be off putting, but you'll find that in most areas.

Your hotel though gets mixed reviews

we stayed next to the Tenderloin area(Geary Street) and it didn't bother us. There do however seem to be a lot of reviews where folks were worried about homeless people around your hotel. If you look at them closely it is more a perceived fear more than actually being in any danger. I haven't read any reviews where hotel stayers were attacked. The walk to our Las Vegas hotel from the Strip sounds similar to the reviews your hotel has. We were definitely warey about some of the characters we had to pass but soon got used to them and realised that they were just down on their luck/drunk and no threat. You are about a 5 min walk to loads of restaurants and shops and also to the tour buses. A taxi through Tenderloin is interesting by the way- some very colourful characters who wouldn't look out of place in the Jerry Springer show
Just head in the right direction when leaving the hotel- and obviously, it is a budget hotel so it wont be the lap of luxury,although the low ratings seem to be mainly due to the location.

Last Time we Went we stopped at union Square there was a lot more homeless people around than times we had been before they are no real threat but at night i would just be a little more wary of your surrounding during the Day its fine..