If approved by City Council, the hotel projected to be built at the corner of Chestnut and 15th streets would receive the most public dollars of any hotel built within the city limits, according to City Councilman Wilson Goode Jr.
Almost every hotel receives public subsidy, but according to Goode, the hotel would receive $115 million over the life of the 20-year tax increment financing (TIF).
At a Finance Committee hearing Thursday, City Council members listened to testimony and then pushed forward a bill which would grant a tax break for the hotel slated to be developed by Starwood Hotels and developer Brook Lenfest.
The plan is to develop W and Element hotels, which would include a total of 700 rooms, at 1441 Chestnut St. The total cost of the project is $280 million. The developers claim to only be able to cover $205 million.
Goode became combative after W Hotel developer Jeff Cohen could not tell him what the profit margin would be on the project.”You can’t tell me how much money you’re going to make off the project?”
“I can’t give you the dollar actually, I don’t recall it, but I know it’s a single-digit return,” Cohen said.
“You can’t tell me the dollar amount? That’s funny,” Goode said. “I’ll be voting no.”
Seven operators of other big-name hotels believe the city won’t see a return on investment and city residents won’t see a lot of jobs. Also, they say the hotel is too far from the convention center.
John Grady, of the the Philadelphia Industrial Development Corp., said the hotel would bring more visitors into Center City and enhance the city’s walkability factor.
The main objective, proponents say, is to make room for more groups to visit the convention center and make use of the recent expansion.
Ben Rowe, chief financial officer of Kimpton Hotels & Restaurants, testified Thursday that it doesn’t make sense to “build a 700-room hotel for a situation that may only occur a few days out of the year.”
“The public sector has strategically invested in its tourism and convention infrastructure, and for 20 years the market has consistently shown the ability to absorb new rooms, attract new demand and increase financial performance,” Grady countered.
Follow Tommy Rowan on Twitter: @tommyrowan
Follow Metro Philadelphia on Twitter: @metrophilly
Follow Metro Philadelphia on Facebook: Metro Philadelphia