|By Dan Fitzpatrick, Pittsburgh
Post-GazetteMcClatchy-Tribune Business News
Mar. 1, 2007--It's not a Ritz-Carlton.
And it's not a Four Seasons.
But PNC's choice of Toronto-based Fairmont Hotels & Resorts to manage its new 185-room Downtown hotel brings to Pittsburgh a well-known operator of luxury hospitality flags around the world, from The Savoy in London to The Plaza in New York to the landmark Fairmont Hotel in San Francisco.
The Fairmont Pittsburgh is expected to open in summer 2009 atop the 23-story Three PNC Plaza, a 780,000-square-foot, office-residential-parking complex currently under construction along Fifth Avenue. The hotel rooms will fill portions of the top 10 floors, providing unobstructed views of PNC Park, while the lobby and entrance will sit on the first floor, near Liberty Avenue and Fifth.
Twenty eight condos -- called The Residences at The Fairmont -- also will take portions of the upper floors, separated from the hotel by different elevator lobbies. A 6,000-square-foot hotel ballroom will overlook Fifth, on the second floor, its glass windows visible to the street below.
The $178 million project, up $8 million in price from last summer's groundbreaking due to slight design changes, is the cornerstone of a Downtown revival plan that includes an array of new residential towers throughout the Golden Triangle. Just yesterday, the Pittsburgh Cultural Trust and Trek Development announced plans for a 61-unit loft and studio conversion of the 12-story Century Building, along Seventh Avenue, only blocks from PNC's construction site.
"It is PNC's aspiration to deliver the best project we could for the city of Pittsburgh," said PNC Financial Services Group Senior Vice President Gary Saulson, the company's director of realty services. "We think getting a Fairmont Hotel is certainly a tremendous step in the right direction."
The Fairmont, Mr. Saulson argued, will enhance Pittsburgh's ability to attract top-flight conventions and thus "significantly change the face of Pittsburgh's convention business," addressing a shortage of hotel rooms at the higher end of the market. Downtown, the 300-room Renaissance Pittsburgh Hotel on Sixth Avenue is the most expensive on average, with a daily room rate around $150 a night. Its corporate rate is $239 per night, and it charges between $299 and $400 for most suites, depending on the night.
Despite its price, Renaissance fills about 75 percent of its rooms, on average, among the highest occupancy rates in the city. Its performance is an indication to Mr. Saulson that demand exists for a higher-priced, more upscale hotel experience. The Fairmont will be a "step above" the Renaissance in price, Mr. Saulson said.
Renaissance sales and marketing director Tom Hemer agrees there is more room at the high end of the hotel market Downtown for a competitor such as Fairmont, but, "I haven't had the opportunity to prove that," he said. "There hasn't been another hotel out there."
He described Fairmont as a "very, very good" operator but not as well known as certain worldwide rivals.
"Everyone knows Ritz-Carlton," said Mr. Hemer. "Everyone knows Four Seasons. Does everybody know Fairmont? That is the question."
Mr. Saulson of PNC conceded that the bank spoke to a "a number" of hotel management companies but that having a flag of Fairmont's caliber was always "our aspiration."
The company, billing itself as the largest luxury hotel manager in North America, oversees 50 hotels in 10 countries. Many are legendary properties in their respective cities.
The original Fairmont was in San Francisco, a property that survived a major 1906 earthquake to open in 1907. Other landmark properties include The Fairmont Olympic Hotel in Seattle, The Fairmont Miramar Hotel in Santa Monica, Calif., and The Fairmont Chicago.
Canadian Pacific Hotels purchased Fairmont Hotels in 1999.
PNC liked Fairmont's corporate culture, as well.
"They strive to relate to the communities they do business in -- they like to buy a lot of locally grown produce and use a lot of locally provided food products in the hotel," Mr. Saulson said.
However, writing Fairmont into the larger plan for Three PNC Plaza has raised the construction costs from $170 million to $178 million due to the company's design requirements and the complicated task of mixing office, hotel and residential space. In addition to a hotel and condos, Three PNC will have 326,000 square feet of office space -- half taken by PNC and half leased by law firm Reed Smith.
PNC will own the entire complex and will pick up the extra costs, Mr. Saulson said.
The site already has a $48 million in public support -- $30 million from the state and $18 million in tax-increment financing, a tool that diverts future property tax revenue created by a project to pay off bonds issued to finance a project.
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