Quote:
Originally Posted by tsarstruck
Since the average rate in Philly hovers around $200, and the Comcast Four Seasons projects to be about $500, I have to imagine they're projecting limited demand.
I'm pretty shocked that all of you are saying that Philly's hotel market is underserved based on really patchy anecdotal evidence. Philly's ADR is about 30% cheaper than Boston's. And while things are improving, improving means getting back to where we were in 2006 for ADR/RevPar. There's reason for moderate optimism, but saying that we're seriously under-supplied doesn't make sense to me:
"RevPAR levels for Philadelphia hotels should strengthen in the near term, particularly as existing hotels continue to drive room rate. HVS expects RevPAR to achieve a level around 5.0% over the course of the next two years, but then moderately drop off as economic conditions begin to normalize. The strengthening of Philadelphia’s diverse businesses and demand base, coupled with its historical significance and an array of attractions, should allow for continued growth going forward."
http://www.hotelnewsresource.com/article73217.html
http://imgec.trivago.com/contentimages/press/images/us_dec_2013_thpi_chart.pdf |
Now we're getting somewhere. So this is what this is all about - apparently CC's ADR has still not recovered since the financial collapse.
This makes a lot more sense than blaming everything on the high cost of construction in Philly. Many other cities have the exact same problem - NYC, Boston, Chicago - other union strongholds - to name a few.
Aro1419 - what evidence do you have that most projects in the city are receiving subsidies? Totally untrue as far as I know. Beyond a few high profile projects (Comcast), most of the recent residential developments have needed none. I don't think the Murano, Residences at the Ritz, 10 Rittenhouse, and many of the most recent apartment construction took any. And I don't think the FMC tower will get any beyond the KOZ.
I think the most telling point was made in the Philly.com article linked to by Nightman:
" C. Patrick Scholes, senior gaming and lodging analyst at FBR Capital Markets, said Boston was more of a financial capital and home to several mutual funds and hedge funds.
"This corporate travel segment tends to pay more for rooms," he said. "Whereas in a more leisure-tourism market like Philly, the rates that you can command for that group are less."
To me, that means that our hotel market is driven entirely by conventions (maybe 50-80 nights a year at best) and tourism (and only in the warm months). We're missing the constant, steady flow of business travelers that keep room rates high year-round.
So, with the exception of a few high demand times (Conventions, Summer tourism season) we are struggling to get there in terms of whats needed to crate prices high enough to warrant new construction. It seems that while the convention industry creates demand, its not enough to overcome the most recent financial downturn.
The good news is that according to these articles, the ADR should have at least recovered to pre-recession levels by 2014. Dranoff, savvy as he is, would be the guy to know this. I particularly like his project because of the architecture, and because it expands the skyline south. I'll keep my fingers crossed that he can get the financing he needs to break ground!
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), striking Laurel between Canal and Delaware for the Canal Street projects, several bills for the SLS Tower, and several bills for the CITC. All and all, great news that all those projects are still churning on.
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