Making room, but not nearly enough

Philadelphia convention officials, hoteliers, and hospitality experts have touted a need for up to 2,500 new hotel rooms to support the newly expanded Convention Center for its spring 2011 rollout.

There's one big problem: The city will be nearly 2,000 rooms short of the goal.

The credit crisis has stalled development of several hotels proposed for Center City, forcing existing hotels to shoulder the load of housing additional conventioneers.

Peter Tyson, vice president of PKF Consulting, which tracks the region's hospitality industry, said obtaining financing to build hotels "probably will not ease until 2010."

Factor in an additional 18 to 24 months to build a hotel, and 2012 could be the earliest that new hotels will start sprouting here - at least a year after the $700 million newly expanded Convention Center opens.

Currently, there is no shortage of room, because of the economic downturn.

Only two Center City hotels are scheduled to open this year: the 202-room Le Meridien in the old YMCA building at 1421 Arch St.; and the 231-room Hotel Palomar under the Kimpton brand at 117 S. 17th St. at Sansom.

Combined with the 92-room Sheraton Four Points Hotel that opened at 1201 Race St. in December, the three hotels will add 525 rooms by the end of this year - far short of the 2,500 that the city was banking on to support the bigger Convention Center.

Convention and group business make up 40 percent of market demand for hotel rooms in the city.

Realizing no more new rooms will be ready, convention officials are marketing the expected inventory - about 11,000 Center City rooms - to planners who tend to book conventions five or more years in advance.

"We don't sugarcoat it," Jack Ferguson, executive vice president of the Philadelphia Convention and Visitors Bureau, which is in charge of booking conventions for the expanded center, said last week. "We tell them what is proposed to be developed, and that we will have inventory in existing hotels."

Ferguson said the plan was to increase room blocks in existing hotels until the new hotels were built.

"If planners come in now and need rooms, we reach out to existing hoteliers," he said. "As a new hotel comes online, we will adjust."

Last summer, at least five other hotel projects were on the drawing boards that might have supplied up to 2,500 rooms by 2013.