An upscale W Hotel is scheduled to break ground next year on a half-acre site that was originally planned for a $420 million Waldorf-Astoria Hotel with luxury condominiums before the lending markets collapsed four years ago.
The new hotel would sit on what is now a surface parking lot at 1441 Chestnut St, just behind the Ritz-Carlton Hotel and its condo tower, according to a representative of Starwood Hotels and Resorts Worldwide Inc., which owns the W brand.
"It is going through," Katherine Tory, a member of Starwood's development team, said Tuesday. "Construction is set to begin in about a year."
She said the hotel could open as early as April 2014. The number of rooms, floors, and other details were still being worked out.
The W brand is known for being edgy and attracting a younger, hip crowd with its lounges, spas, and entertainment venues. On the Starwoodhotels.com website, W Hotels are described as "where iconic design and contemporary luxury set the stage for exclusive and extraordinary experience."
Confirmation of a new W Hotel comes two weeks after ground was broken at another surface parking lot, at 12th and Arch Streets, to make way for a 246-unit Hilton Home2Suites. Hospitality experts say it may be another sign that financing is starting to loosen for hotel projects to support the one-year old completion of the $786 million expansion of the Pennsylvania Convention Center that needs additional rooms to attract the biggest gatherings here.
The 1441 Chestnut St. location is the latest example of a site that has gone through a few iterations because of the economy and tight lending. The site has been vacant since the fire-ruined One Meridian Plaza was leveled in 1999. In October 2008, developer Timothy J. Mahoney III, chief executive officer of Mariner Commercial Properties Inc., of Ardmore, announced plans to convert the site into a 58-story Waldorf-Astoria operated by Hilton Hotels Corp. The project was to include upscale retail, a signature restaurant, seven floors of valet parking, and a spa, as well as 136 condos, starting at $1 million.
But the recession hit and lending dried up. By the spring of 2009, Mahoney said the project had been put on ice.
In October 2010, he sold his 50 percent stake to partner Brook J. Lenfest of Brooks Capital Group L.L.C., of Bala Cynwyd, for $12 million in an auction.
"We realized there were structural problems in the marketplace … including the credit markets, softening prices, and oversupply of competing inventory," Mahoney, who had spent a decade assembling the land, said then of his decision to sell his stake.
Lenfest, who heads NetCarrier Inc. of Lansdale, a local-exchange carrier, did not return calls Tuesday seeking comment. Brooks Capital Group is described in its website as a venture-capital firm specializing in early-stage investments. Brook Lenfest's father, H.F. "Gerry" Lenfest, is one of the new owners of Philadelphia Media Network, which owns The Inquirer, Daily News, and philly.com.
As recent as April 18, Starwoodhotels.com featured a Philadelphia location in its "New and Upcoming Hotels" section and even went so far as to specify "opening in January 2015" at 1441 Chestnut St. But the listing was removed a few days later, on April 23. Starwood would not say why it was removed.
Peter Tyson of PKF Consulting USA said of the location: "Well-located with respect to the greatest concentration of Class A office space in Center City, and the restaurants and entertainment venues on the Avenue of the Arts and Walnut Street ... both appealing to the upper end of the commercial traveler segment."
A W Hotel here would add to the slate of luxury boutique hotels that have entered the Center City market in the last three years, including the Kimpton brands Palomar and Hotel Monaco as well as a Le Meridien. The Latham Hotel at 135 S. 17th St. is undergoing a major renovation.
And Tuesday was the soft opening of a 136-unit Homewood Suites in University City owned by Campus Apartments.
A survey on Tuesday showed revenues were up for hotels nationally. In 2011, 80.5 percent of the properties that participated in the annual survey by PKF Hospitality Research L.L.C. reported an increase in total revenue over the previous year. Nearly three-quarters achieved growth in profits. "On average, hotels ... saw their profits increase by 12.7 percent in 2011," said R. Mark Woodworth, president of PKF-HR.
Starwood Hotels & Resorts Worldwide Inc. is seeing healthy returns so far this year. For the first quarter of 2012, the company reported revenue of $1.72 billion, up 32.4 percent year-over-year. Revenue on the hotel management, franchise, and other income lines increased 13.6 percent to $201 million. Other properties managed by Starwood in Philadelphia include the Sheraton Society Hill and Le Meridien. The company has been looking to build a W Hotel here since 2006.
Mahoney, former owner of the Chestnut Street lot, said he was happy to hear it may now finally become a hotel.
"I would love to see the project happen," he said. "I think a W would be a great addition to the city, and I am excited to hear that Brook has something in the works."
He said the site was fully zoned to develop 800,000 square feet on 58 stories for the original five-star Waldorf.
"Those approvals are still in place," Mahoney said. "It's ready for building permits at this point."