Host Hotels & Resorts hopes to sell Philadelphia's largest hotel, the 1,400-room, 23-story Philadelphia Marriott Downtown, reports Real Estate Alert, Hoboken, NJ. The newsletter said Host hopes to fetch as much as $325 million, or $231,000 per room, more than triple the total price paid in any previous Philadelphia hotel resale. Broker is Eastdil Secured. Host officials were not immediately available when I called for comment.
Host sells hotels where it expects only slow growth in future revenues, or when major improvements are needed, or in markets where prices have lately risen, the company said in its 2012 annual report. Real Estate Alert said the Downtown hotel, built in 1995 and expanded in 1999. was renovated for $54 million in 2011. Some of the hotel's ground-floor retail space is vacant. Host also owns Philadelphia's Four Seasons and Airport Marriott hotels, among others.
The Philadelphia Marriott stands across Arch St. from the hotel-tax-subsidized Pennsylvania Convention Center, which, like other U.S. convention centers, has had a tough time convincing big new shows to locate there over the next few years. Philadelphia hotel room occupancy fell to around 66% in the first quarter, from 69% a year earlier, the report added, citing Smith Travel Research. Host has sold four hotels since 2011, including the nearly 1700-room Marriott Marquis in Atlanta, which fetched $293 million from the national investment trust of Abu Dhabi.
A sale "is very possible," says Jay Shah, boss at the Philadelphia-based Hersha hotel group. "Philadelphia is in fact a slow growth market. It is expected to be a lagging market for the next several years due to the lack of corporate demand generators in the city and a significantly underperforming convention center."