More hotels planned for Philadelphia

New hotels are being planned citywide, a trend experts say is likely to weather recent financial difficulties in the real estate markets.

Spurred by the planned expansion of the downtown Convention Center, developers have unveiled plans for several new hotels both in Center City and nearer to Penn's campus.

Developer Tom Lussenhop, working with Campus Apartments and the Hersha Group - a hotel real-estate and operating company based in Philadelphia - has already announced plans to restore an abandoned Italianate mansion on 40th and Pine Streets and build an 11-story extended-stay hotel.

The plan must be approved by the University's Board of Trustees and local organizations.

Last week, the Philadelphia Inquirer reported that the Hersha Group has plans for an additional new hotel in University City. A spokesperson from the Hersha Group could not be reached for further details.

Demand for hotel rooms in Philadelphia is currently strong, and the Convention Center expansion is expected to attract more business. However, it's not clear if the downtown spillover will extend to University City hotels.

Peter Tyson, vice president of PKF Consulting's Philadelphia office, predicted that the expanded Convention Center will generate increased demand for hotels, even in University City.

Director of Sales and Marketing for the Inn at Penn Nancy Barag said that the Inn's occupancy rates are currently "solid." She added, however, that "additional hotels in University City will detract from our business."

Barag also expressed doubt that an enlarged Convention Center will be enough to spark demand across the river, as plans for four new hotels in Center City have also been recently announced.

Although commercial real estate loans are scarce and construction costs are relatively high, Warren Marr, a director at the Philadelphia office of the PricewaterhouseCoopers LLP consulting firm, said hotel construction will not come to a halt.

However, "properties that are in the planning stages are going to be delayed," Marr warned, though he added that hotels will continue to be constructed nationwide where demand is rising.

So far, the reaction to proposed University City hotels has been mixed.

The Delaware Valley Smart Growth Alliance issued a statement this week commending the proposed hotel on 40th and Pine streets for its convenient location near the Hospital of the University of Pennsylvania, other University institutions and various public-transportation hubs. The Alliance also lauded the project for its inclusion of green roofs.

Executive Director of the University City District Lewis Wendell acknowledged that the new hotels may be beneficial to the neighborhood by "creating jobs and providing a boost to the local economy."

He cautioned, however, that a new development can have adverse effects if not properly planned.

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