UPDATE: Developer Brooks Lenfest responds here. EARLIER: A coalition of Center City Philadelphia hotel owners has written Mayor Michael Nutter and City Council Chairman Darrell Clark to protest planned tax breaks for Chestlen Development Group's proposed W and Element hotels at long-vacant 1441 Chestnut St. They say the site is not blighted; market financing is available; the tax breaks will probably be larger than any new taxes the hotels generate; Philly can't afford more tax breaks when its public schools are underfunded; and there are already more hotels in Philly than city business and tourism can support. Chestlen principal Brooks Lenfest was unavailable for comment at his Bala Cynwyd office when I called. The letter:
As members of Concerned Hotel Owners of Philadelphia, we write to you to respectfully express our deep concern over the City’s plans to create the Headquarter Hotel Tax Increment Financing District for the construction of a 700-room hotel at 1441 Chestnut Street.
Our coalition members appreciate the support the City and Council have always shown for the hotels in Philadelphia. You have been tremendous advocates, working with us to creatively address issues and attract visitors to the City and our hotels. We recognize that these proposed efforts to subsidize the development of a W and an Element Hotel are intended to build business at the Pennsylvania Convention Center – a goal we all support. But this is the wrong time, and the wrong project.
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.
If the W development project was a true headquarters hotel – a 4-star conventional property adjacent to the Convention Center – it could help sales efforts and this hotel community would be more supportive. However, this development is too far from the Convention Center to have the intended effect.
Furthermore, the real key to attracting more convention demand is overcoming the Convention Center’s well-publicized cost issues. We commend the effort of the Commonwealth and the City to address these obstacles, but it is likely to be several years before the full impact of these changes are felt and the situation improves in a meaningful way.