Philly operators bank plans on increased convention capacity

Philly operators bank plans on increased convention capacity

Mark Hamstra

Mark Hamstra

PHILADELPHIA – ‘If you build it, they will come,’ according to the adage adopted from the movie ‘Field of Dreams.’ But for the city that built the second-largest convention center in the Northeast, the question remains: ‘Where will they stay?’

The 4-year-old Pennsylvania Convention Center, a $522 million, 1.3 million-square-foot facility in Philadelphia’s Center City area, cannot yet vie with structures in places like Chicago and New York for the nation’s largest business and political gatherings because of a shortage of nearby hotel rooms. A recent spate of development deals, however, could signal the start of a hotel-building spree that local business owners hope will assist Philadelphia in enticing such substantial groups as the American Medical Association and the Democratic arid Republican national conventions. Philadelphia restaurateurs, enjoying a culinary Renaissance born roughly in sync with the convention center’s opening, eagerly await the bulge in spending by conventioneers that the added room capacity is expected to generate. As existing operators expand and new players enter the city, they anticipate that Philadelphia’s growing exposure as a destination for travelers will fuel their growth engines.

‘The convention center has helped, but once they get the hotels it should be great for business,’ said Steven Starr, chef-owner of two restaurants – The Continental and Care Republic – in Philadelphia’s Old City district, about 10 blocks from the convention center. Starr said he has two additional Old City restaurants on the drawing board, a Nuevo Latino concept he plans to open in September and a ‘trendy, Mediterranean, foods-of-the-sun’ eatery that he thus far has only conceptualized.

Operators from around the country also are flirting with the City of Brotherly Love, according to local real-estate agent Susan Wasserman, who said there’s been ‘a lot of quiet activity going on’ among restaurateurs interested in Philadelphia. Among them, New York’s Le Colonial recently signed a lease on a location in Center City-Philadelphia’s business hub for a branch of its French-Vietnamese dinner-house concept, while Chicago’s Levy Restaurants group reportedly is eyeing Center City for a third outpost of its Bistro 110 brand. A Levy spokeswoman, however, would say only that company executives have been examining Philadelphia as a potential expansion site.

Neil Stein, owner of The Striped Bass in Philadelphia’s Center City area and a board member of the Philadelphia Convention and Visitors Bureau, also hopes to expand his holdings with the planned creation of an upscale, art-deco steak house tentatively dubbed ‘Neil’s.’ He ranks the addition of hotel rooms as local restaurateurs’ top priority. ‘We can’t bring in the major conventions,’ he said. ‘We have a great convention center, but people are traveling 45 minutes from their hotels. They’re staying out in New Jersey.’

According to a 1995 survey by the Professional Convention Management Associations, restaurants nationwide derive 12 percent of their annual revenues from conventions, meetings and other business-related travel events. Hotels, meanwhile, garner more than a third of their annual revenues from such events. The meeting-and-conventions industry accounts for nearly $85 billion in spending each year, according to the PCMA, and the industry as a whole is growing. More than half of associations responding to a 1996 PCMA survey indicated that they expected higher attendance in 1997 than in 1996, when attendance was higher than in the preceding year.

Hotel occupancy rates also have been on the rise. Hotel occupancy in Philadelphia was about 75 percent of capacity in 1996, mirroring a national trend of above,average room sales. Led by Mayor Ed Rendell, Philadelphia government officials have a goal of adding some 2,000 hotel rooms by the year 2000, which would bring the city’s total number of rooms to about 10,000 – enough to compete for the Republican and Democratic presidential conventions of that year, according to mayoral representatives.

R.C. Staab, a spokesman for the Philadelphia Convention and Visitors Bureau, said the city would pitch for both parties’ conventions when the bidding process begins in 1998.

Hotel developers, meanwhile, had been waiting to see if Philadelphia would prove itself an attractive draw for conventioneers and to see what kind of financing the government would provide in the form of loans and tax breaks before committing to the projects. ‘In a lot of first-class American cities, you have a chicken-and-egg situation between building convention centers and building hotels with the rooms to go with the convention centers,’ said Jonathan Tisch, president and chief executive of Loews Hotels, which recently committed to build a 590-room hotel directly across the street from the convention center.

Tisch, whose company operates 14 hotels in various cities, said Loews had been eyeing Philadelphia for the past seven or eight years. The initial success of the convention center, combined with what he described as a new spirit of cooperation between the business community and the city administration, led him finally to close the deal on the $105 million, 36-story project that will involve the renovation of one of the city’s landmarks, the Pennsylvania Saving Fund Society – or PSFS – building. The Loews project will receive $38.2 million in public financing, including a $20.75 million Federal Housing and Urban Development loan and $2.2 million from the Philadelphia Industrial Development Corp., which provides secondary mortgages to developers.

The Loews Philadelphian will provide a second headquarters hotel for conventions, which would allow the city to host two large conventions simultaneously, according to Staab of the Convention and Visitors Bureau. Marriott opened the first headquarters hotel – a $212 million, 1,200-room building adjacent to the convention center – in 1995 and is considering an annex that would add another 210 suites and also would house a Hard Rock Cafe restaurant.

Philadelphia hosted 32 citywide conventions – defined as those that book more than 2,000 rooms on their peak night – in 1996, and a similar total is expected this year, Staab said.

‘Everybody now sees that it is a good convention town,’ said Ted Beitchman, deputy chief of staff for Mayor Rendell, who noted that several recent commitments should bring more than 1,000 additional hotel rooms to the city.

According to the Pennsylvania Convention Center Authority, more than 30 hotel projects between Center City and the Philadelphia airport about 8 miles away – have been proposed. Many would be conversions of vacant, historically certified office buildings, which makes developers eligible for a significant tax credit. Developers also can apply to receive some portion of the $100 million in funding the city has earmarked to provide secondary mortgages.

Other projects in the works include a 400-room Westin Hotel on Broad Street, slated for a late-1998 opening; a 200-room Hawthorne Suites hotel on 11th Street in the rear of the convention center, also scheduled to open in late 1998; and a 480-room Marriott Courtyard, which is still in the early planning stages.

City leaders have been trying to ensure that the added rooms will not be left vacant. Earlier this year the Greater Philadelphia Chamber of Commerce led the formation of The Regional Arts and Culture Economic Initiative – RACE – to examine the city’s arts-and-culture offerings and the role they play in the hospitality industry.

Last year’s exhibit of the works of French painter Paul Cezanne at the Philadelphia Museum of Art, for example, drew nearly 550,000 visitors. ‘That was a once-in-a-lifetime thing,’ said Laura Coogan, a spokeswoman for the museum. The museum’s restaurants, operated by New York-based Restaurant Associates, tallied nearly four times the sales of the previous summer during the exhibit. Coogan said her staff works closely with the Convention and Visitors Bureau to market the museum – perhaps best known as the site of Rocky Balboa’s morning jog in the movie ‘Rocky’ – as a cultural attraction that ranks among the best any city has to offer.

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