Market Street Marriott sells as a bargain

The 1,400-room Marriott Downtown on Market Street, a key hotel for visitors to the expanded Convention Center, has been sold to investors for a price that values the property at $303.4 million.

Host Hotels & Resorts Inc., of Bethesda, Md., said it sold its majority stake in the hotel to investors Oaktree Capital Management L.P., and Clearview Hotel Capital L.L.C., of Newport Beach, Calif.

Host had hoped to sell the Marriott, in the 1200 block of Market Street, for as much as $325 million, or $231,000 a room. Host executives have said they sell hotels when they decide a market faces a period of slow growth.

For guests and workers, "nothing changes," said Robert Allen, the hotel's general manager for operator Marriott Corp. Allen described 2013 as "the busiest year ever for this hotel." In a statement to workers, he added that management expects a "similarly successful 2014."

Like some other cities, Philadelphia has suffered from a lack of major conventions to keep hotels busy.

For example, developer Brook Lenfest and his partners want to spend $280 million building 700 rooms in two hotels near City Hall. Developer Dennis Maloomian's proposed Aloft hotel adjoining the Convention Center and developer Robert Zuritsky's new HomeSuites add to the supply, as have the high-end Palomar, Monaco, and Le Meridien in recent years.

"If I weren't trying to benefit the city, I guess I could have just bought the Marriott or a building and retrofit it as a hotel, or bought several hotels," instead of building new, said Lenfest, whose project is the latest beneficiary of state and city aid from officials who hope new hotels will boost jobs and taxes.

"The next few years are going to be tough," said Ed Grose, executive director of the Greater Philadelphia Hotel Association.

"With our construction costs as high as New York, but our hotel room rates [as low as] Baltimore, you can't build a hotel in this city without a lot of tax breaks," he added. "We need to pick up our hotel booking pace and get the Convention Center operating on all cylinders."

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