The W Hotel Tax Break: Foolish or Defensible?

1441 chestnut street

Photo of 1441 Chestnut Street via Philadelphia Real Estate Blog

So let’s see if I’ve gotten this right: The real reason the bigger, bolder Pennsylvania Convention Center is empty much of the time and getting emptier is because we don’t have enough hotel rooms.

This comes as a total surprise to me. Here I’ve been laboring under the conventional wisdom that the center’s well publicized labor (and labor cost) problems are the main reason conventions are staying away in droves.

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Center City Hotel Owners Think W Hotel Is a Bad Bet; Lenfest Says They’re Just Jealous

1441 chestnut street

Photo of 1441 Chestnut Street via Philadelphia Real Estate Blog

Yesterday the Concerned Hotel Owners of Philadelphia published an open letter questioning the wisdom of opening a 700-room hotel in downtown Philadelphia — and particularly with public monies. From the letter:

Philadelphia’s downtown hotel market is not strong enough to absorb another 700 rooms on top of what’s already planned without cannibalizing business from existing properties. The next few years are projected to be generally flat for the Center City hotel market due to moderate increases in supply, but only modest increases in demand and continued pressures on average room rate.

Occupancy currently sits below that of other major East Coast markets, and property revenues are projected to grow far slower than most other major markets over the next three years.

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Brook Lenfest Accused in W Hotel Real Estate Deal–Again

Brook J. Lenfest, scion of philantropist Gerry Lenfest and owner of the Chestnut Street site slated to be the new Starwood Element/W Hotel, is in hot water again. The 22,400-square-foot parcel was originally purchased in 2000 by Lenfest and a group others–including Mariner Chestnut Partners L.P.–for $11.15 million. Plans (Waldorf Astoria, anyone?) ensued and tanked and were pitched and ditched. Litigation has been endless.

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