Mayor Nutter emphasized the need for striking the right balance when it comes to the city's hotel growth and said he expected demand to pick up in the coming years as a result of the expanded Convention Center and the city's popularity as a cultural and arts destination.

"We want to be very strategic, but be able to serve what I expect to be a growth in business because of the expansion of the Convention Center and increased tourism here," said the mayor, a featured speaker at Monday's annual luncheon of the Greater Philadelphia Hotel Association, which represents 87 member hotels, including 44 in Center City.

Mark McDonald, a spokesman for Nutter, said the city would issue a request for proposals to develop a hotel at 1801 Vine St., at the old Family Court, in the first quarter of 2012.

"In our view, we need roughly about 1,000 more [rooms], another headquarters hotel with 600 to 700 rooms, and a couple more hotels in typically the 200- to 250-room range," he said.

Nutter's use of the word strategic regarding city hotel development was purposeful. The prior speaker was James Gratton, president of the hotel association, who preached a message of moderation.

"Although our industry has still not fully recovered from the recession, the past year has been very encouraging with strong year-over-year growth in RevPar [revenue per available room]," said Gratton, who is general manager of the Courtyard by Marriott Philadelphia Downtown. "Nonetheless, Philadelphia continues to be a difficult market for hotels to prosper due to its cost structure and many regulations.

"We have to be smart and strategic with regards to growth. It is important we do not overbuild and saturate the market with too many hotel rooms, which would affect the financial stability of current hotels. It was not that long ago that we experienced some hotels closing or even facing foreclosure because of their economic performance."

The hoteliers and the city and convention officials have clashed over the appropriate number of new rooms needed to support the $786 million expansion of the Convention Center, which opened in March. The two sides have since reached an accord on 1,000 new rooms instead of 2,000.

Since 2006, three new Center City hotels totaling 525 rooms have been completed - Hotel Palomar by Kimpton, Four Points by Sheraton, and Le Meridien by Starwood. The downtown area currently has 11,160 rooms.

In 2012 and 2013, an additional 650 rooms will be added to the market, based on projects that are under construction. They include Kimpton's Hotel Monaco on Independence Mall, a Hilton Home2Suites across from the Convention Center, and a Hilton Homewood Suites in University City.

Convention and city officials still want an additional thousand rooms, with 600 to 800 of those rooms existing in a hotel anchoring the Convention Center.

"[Beyond] those under construction, we would like to add an additional 1,000 rooms . . . to fully support the operation of the Pennsylvania Convention Center," said Jack Ferguson, president and chief executive officer of the Philadelphia Convention and Visitors Bureau, who was a guest at Monday's luncheon at the Sheraton Society Hill Hotel.