PITTSBURGH—Once an aging relic of a booming steel industry come and gone, Pittsburgh has since reinvented itself as a vibrant hub of the energy and technology industries.
And the hotel industry has taken notice.
Seven hotel projects comprising 849 rooms have recently opened in the greater Pittsburgh hotel market. In addition, eight projects comprising 728 rooms are under construction, according to STR, parent company of the Hotel Investment Barometer.
“The secret’s out,” said Mark Shalala, director of franchise development for Choice Hotels International’s Cambria Suites brand. “A lot of supply has come into the market in some of the key areas, and there’s probably even more planned.”
Choice has a number of hotels in the area, including two Cambria Suites that have “come out of the box strong,” Shalala said.
The overall market also has shown increases through September, according to STR data:
• occupancy is up 3.7% to 69.4%;
• average daily rate is up 5.5% to US$104.05;
• revenue per available room is up 9.3% to US$72.26; and
• the market posted a 7.6% RevPAR gain in 2010.
That performance has attracted developers to the region, but not enough to overwhelm demand as of yet, Shalala said.
“We think the market can take more supply, but it’s just a matter of when this product can come into the market and strategically try to place a product where we think there’s demand,” he said.
Shalala said he’d like to get two, if not three, more Cambria Suites into the market.
“Pittsburgh has been on the radar on most of the major developments that we’re working with in the Northeast area,” he said.
Transactions slow going
Development appears to be the preferred method of entry into the city as hotel transactions have been few and far between during the past few years.
Of particular note was the workout last year to take over the former Hilton Pittsburgh by Tampa, Florida, cardiologist Dr. Kiran C. Patel. The hotel, now a Wyndham Grand property, was previously owned by Shubh Hotels Pittsburgh LLC, according to the Pittsburgh Post-Gazette.
Four hotels have traded hands since June 2010, according to STR Analytics, sister company of HotelNewsNow.com/Hotel Investment Barometer.
They include:
| Hotel | Date | Rooms | Price, including debt | Buyer | Seller |
| Renaissance Pittsburgh | January 2011 | 291 | US$45.3 million | RLJ Development LLC | Sage Hospitality Resources LLC |
| Courtyard Pittsburgh Downtown | June 2010 | 182 | US$35 million | Inland American Real Estate Trust | Moody National Companies |
| Wyndham Pittsburgh-University Place | January 2011 | 198 | US$20.75 million | RLJ Development LLC | N/A |
| Ramada Greentree | September 2010 | 201 | US$2.65 million | PI Hospitality LLC | CW Capital |
Source: STR Analytics
“We don’t have any current listings in that market,” said Mayank B. Patel, a senior analyst with Hunter Realty Associates. “I haven’t seen much. The ones that came out were the RLJ assets that they purchased at the beginning of the year. Outside of that there hasn’t been too much activity.”
John McCaffrey, who works for Auction.com, an asset disposition website that processed more than US$4 billion worth of commercial real estate last year, echoed that sentiment.
“Rarely do we ever have any asset that shows up in Pittsburgh,” he said.
At least one company has a deal in the works. Chatham Lodging Trust previously announced it expects to close on the Residence Inn Pittsburgh University Medical Center. The deal has yet to close.
In an interview, Chatham’s chairman, president and CEO Jeffrey H. Fisher, said the real-estate investment trust is continuing to assess opportunities, but near-term deals are unlikely. Chatham is just about tapped out following its joint-ventured deal for a portfolio of 64 Innkeepers USA Trust hotels in which it made a US$37-million investment.
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