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Hotel boom in Pittsburgh area expected to continue

| Tuesday, Dec. 25, 2012, 9:15 p.m.
Construction on the new Hyatt House hotel continues at the SouthSide Works, Thursday, December 20th, 2012. Keith Hodan | Tribune-Review
Construction on the new Hyatt House hotel continues at the SouthSide Works, Thursday, December 20th, 2012. Keith Hodan | Tribune-Review

Keith McGraw of Concord Hospitality — one of the region's major hotel developers with 14 properties under ownership or management — doesn't believe the Pittsburgh-area hotel market has been overbuilt.

In fact, McGraw and his partner, Mark Laport, have plans to build at least two more hotels in the region during 2013 and to open two others next year that they are developing in ventures with local companies.

Since 2004, 34 hotels with 3,304 rooms opened in the region, according to the Hendersonville, Tenn.-based Smith Travel Research Inc., a hotel research company. There are 254 hotels operating in the region, it reports.

Despite the increase in hotel building, demand for rooms in the Pittsburgh market remains high.

Hotel occupancy in the region — at 69.4 percent — is higher than in 11 comparable cities, including Philadelphia, Cincinnati, Columbus, Detroit, Baltimore and Charlotte, according to industry figures.

Pittsburgh ranks high in revenue per room and average daily room rate, according to Smith Travel.

That indicates demand is strong, meaning hoteliers have less need to discount by offering promotional rates or listing vacant rooms on Internet sites such as Hotel.com, said Kirby Payne, president, HVS Hotel Management of Newport, R.I.

Even so, Pittsburgh remains below many comparable cities in one category — the number of rooms in the region.

There are 24,114 total hotel rooms here, according to Smith Travel. But comparable cities have more — Philadelphia has 44,213; Baltimore, 33,026; and Cincinnati, 27,830.

Experts like Craig Davis, CEO of VisitPittsburgh, say there is room for more hotels here, and J.R. Shaw, executive director of the Washington County Tourism Promotion Agency, says Washington County also could use more hotel rooms.

McGraw's Concord Hospitality agrees and is building more to bridge that gap.

Construction should be completed in March for its 136-room Hyatt House Pittsburgh South Side, being built in conjunction with Oxford Development at the SouthSide Works. A December completion is scheduled for a 120-room Homewood Suites by Hilton, being built in conjunction with DiCicco Development Inc., in the Scott Station Metro Office Park in Moon.

Concord's planned new developments are a five-story Hyatt House with 128 rooms at the former Don Allen AutoCity site in Bloomfield and a 110-room Hampton Inn & Suites at Settlers Ridge in Robinson.

“We traditionally are getting about two or three new hotels opening each year over the past 10 years,” said Rick Strunk, executive vice president of the Greater Pittsburgh Hotel Association.

Two major full-service hotels could be started in 2013, he said. They are a 160- to 170-room hotel planned in Mt. Washington and a 176-room Hilton Garden Inn, part of the Gardens at Market Square development Downtown.

Most of the other hotels to be built in the region next year will be primarily limited-service or extended-stay facilities, he said.

The hotel construction is welcomed by VisitPittsburgh, the region's tourism promotion agency. But if Pittsburgh is to bring major conventions to the area, it must have at least a 1,000-room hotel connected to the David L. Lawrence Convention Center, Downtown, Davis said.

An expanded convention center hotel has been sought by local officials for years, without success.

The Downtown-North Side-Station Square area has 4,566 rooms in 14 hotels. That, however, isn't enough to attract major conventions or meetings to the region, Davis says.

The city does attract conventions, even as far ahead as 2023.

In 2013, Evangelical Lutheran Church in America will meet here and use 8,930 rooms. Also scheduled are the Fraternal Order of Police centennial convention in 2015, which means 19,356 room nights; the Association for Iron and Steel Technology convention (5,793 rooms) in 2016 and Intel International Science and Engineering Fair in 2018 (12,974 rooms), VisitPittsburgh reports.

Pittsburgh's professional sports and college teams attract considerable numbers of out-of-town visitors for their games — and local hotels are the beneficiaries, Strunk said.

An example is the 142-unit Cambria Suites hotel at the Consol Energy Center. Normally, occupancy is 41 percent, but when the Penguins play there, it reaches 70 percent, and when entertainers such as Lady Gaga or Elton John perform, it's closer to 90 percent, hotel officials have said.

These types of performances fill hotel rooms and are one reason why Pittsburgh hotels were listed by Smith Travel as having the top occupancy rate during the period from January through October among cities of comparable size.

Strunk expects most of the extended-stay or limited-service hotels to be built in the region will be in suburban areas, such as Cranberry and Washington County, where Marcellus shale natural gas development has been strong.

The occupancy rate in Washington County's 2,000 rooms has been in the 70 percent range this year, said Shaw. “The county has been underserved in hotel development, although ... you see occupancy rates of nearly 80 percent in recent years.”

There are seven hotels on or near Racetrack Road, which spans North and South Strabane, in Washington County, which services the Meadows Racetrack and Casino and Tanger Outlets, he said.

Two others are being planned there and in two years, there will be nine or 10 limited-stay hotels offering up to 1,200 rooms.

Sam Spatter is a staff writer for Trib Total Media. He can be reached at 412-320-7843 or sspatter@tribweb.com.

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