The city's first new ground-up hotel since 2000, and the first tailored to support the expanded Convention Center, broke ground Tuesday at 12th and Arch Streets.
Under a cavernous white tent, about 60 feet from the Reading Terminal Market and diagonally opposite the Convention Center, nearly 200 gathered to shovel the first dirt for the $60 million extended-stay Home2Suites by Hilton.
Some say the development may represent a thawing of the lending markets for new hotels here.
"This is another touchdown for Philadelphia," said Mayor Nutter, speaking from a raised stage just before 9 a.m. "This is all about jobs and economic vitality."
Nutter was among the scores of state and local politicians and representatives of the hospitality industry in attendance. A giant excavator sat in the background, and construction crews did pipe work and moved mounds of dirt to make room for foundation beams.
Completion of the 246-unit, all-suites hotel was once in doubt, like the nearly two dozen hotel projects proposed to support what was to be a much larger Convention Center but delayed or shelved permanently because of the recession and lending crunch that hit in 2008.
Parkway Corp., known mostly for its parking garages, stuck with the project for five years. The company owns the surface parking lot where the new hotel is being built and the multilevel parking garage next to it where overnight guests will be able to park. The hotel will also include an indoor pool, a Wii room for games, and 9,750 square feet of retail space at street level.
"Even though the hotel is the right development at the best location, it wasn't an easy project," Parkway's president, Robert Zuritsky, said Tuesday.
Parkway hung on, and over the last two years, a hotel operator - Philadelphia-based Wurzak Hotel Group - emerged. Hilton Worldwide provided the brand, and financing came together. Capital One Bank provided a $25 million construction loan and $10 million in New Market Tax Credits. State and city grants covered the rest.
Of the $60 million cost, $12.8 million was in government incentives, with $4.8 million to be repaid.
Home2Suites is slated to open in summer 2013. City tourism and convention officials hope it heralds the start of other shelved projects to add rooms to support the Convention Center expansion.
"There's nothing like the sweet smell of construction," said State Rep. Dwight Evans (D., Phila.), who championed the expansion in Harrisburg.
The $786 million expansion made the Convention Center the 14th-largest in the country. But a lack of rooms, say convention officials, still puts Philadelphia at a disadvantage when competing for the largest gatherings against other cities, including New York, Boston, and Washington.
Nutter, the Philadelphia Convention and Visitors Bureau, and the Greater Philadelphia Hotel Association reached a consensus last year that the city needed at least 1,000 more rooms - on top of the nearly 1,000 that have recently been added or about to come online - to bring the city's room inventory to about 12,700.
Projects that were delayed but are now back in the pipeline, according to industry experts, include a 178-room hotel at 401 Race St., known as the Pincus Brothers Building project, and a 90-room Juniper Hotel at Juniper and Chestnut Streets. Both are trying to complete financing.
Other hotels soon to debut include the 136-unit Homewood Suites in University City, which has a May 1 soft opening, and the 268-room Monaco in the former Lafayette Building in Old City, which is slated to open in September.
"The Homewood Suites and Home2Suites projects indicate a possible start to the thaw in financing," said Peter Tyson, vice president of PKF Consulting USA.
Home2Suites is expected to create 123 construction jobs, and 146 permanent jobs when it opens in summer 2013, said Zuritsky, who announced the project in September, alongside his father, Joseph Zuritsky, Parkway's chairman and chief executive.
About 80 percent of the 246 suites are to be 375-square-foot studios, with the rest one-bedroom units. Each will have a kitchen and cater to business and leisure visitors who want to stay from one night to three months or longer.
"It's combining the benefits of an extended stay with our focus on service," said Jake Wurzak, son of Howard Wurzak, chief executive of the Wurzak Hotel Group, which will operate the hotel.
He said the nearly 10,000 square feet of retail space would be devoted to food and beverage venues.
The hotel is expected to be a hit among those who want to stay close to the Convention Center, said Julie Coker, senior vice president at the Philadelphia Convention and Visitors Bureau.
"It's another option for the convention attendee and really illustrates our walkability as a city," she said.