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Fairmont Pittsburgh's Success Brings with it Success for Other Downtown Hotels

By Mark Belko, Pittsburgh Post-GazetteMcClatchy-Tribune Regional News

March 04, 2012--Last year, guests voted the Fairmont Pittsburgh as the top hotel in the line in North America in terms of customer satisfaction. But the ones who might truly be thankful for the luxury hotel's arrival Downtown could be its competitors.

When the Fairmont opened its doors here two years ago, it brought not only its famous name but also a level of luxury and accompanying room charges previously unseen in the Pittsburgh market.

That, in turn, has helped to drive up rates at all hotels Downtown.

"All of the hotels never want another hotel to be built because the increase in inventory hurts everyone -- but the Fairmont might be the exception to that," said Tim Zugger, president of the Greater Pittsburgh Hotel Association.

Mr. Zugger said the Fairmont is "a class of hotel Pittsburgh hasn't had" and its rates -- which range from $219 to $399 a night for a standard room during the first week in March -- have served to increase hotel rates in the city as a whole.

"Overall, it's been positive for Pittsburgh," he said.

The impact is evident when comparing room charges Downtown before the 185-room Fairmont arrived and those since it opened in March 2010.

In 2009, the average room rate for hotels in the Golden Triangle and north and east of the city was $111, according to Smith Travel Research. By the end of 2010, that had jumped to $119. Last year it rose to $123.

"I think what [the Fairmont's] done is that it's allowed other hotels to increase their room rate. It's lifted the ceiling on what other hotels can charge," said Mark Popovich, senior managing director of the Pittsburgh office of Holliday Fenoglio Fowler LP, a commercial real estate brokerage.

While some might see rising room rates as a negative, Mr. Popovich said the Fairmont's overall influence on the Downtown market has been a positive one.

He noted the vast majority of people staying at the Fairmont and other hotels Downtown are from out of town. Higher room rates generate more tax revenue and help the hotels to be more profitable, which allows them to hire more people or pay their employees more, he said.

Mr. Popovich said the Fairmont also has given some visitors who might not be inclined to stay overnight in Pittsburgh a reason to do so.

An example of that might be a top executive who flies to Pittsburgh for a meeting and then typically flies back home the same day. But because there's a Fairmont in the city, he decides to stay overnight.

"It's inducing new demand into the market, which is something we've never had before," Mr. Popovich said.

The Fairmont has become the place to stay Downtown not only for CEOs and other business travelers but for numerous celebrities, including actor Tom Cruise and "American Idol" judges Steven Tyler, Jennifer Lopez and Randy Jackson. It also hosted the Baltimore Ravens football team for a 2010 playoff game in Pittsburgh.

Guests are pampered with plush cotton robes, a 14-inch-thick pillow top mattress specially made for the hotel, 42-inch flat-screen TVs and a "media panel" for DVD players, iPods, cell phones and other gadgets.

A pet can stay in the room for an extra $25 a night. The hotel also offers baby-sitting services, 24-hour room service, overnight shoe shining, and same-day dry cleaning, but not overnight dry cleaning, an amenity coveted by some travelers.

While hotel general manager Matthew Sterne refused to confirm which celebrities or other guests have stayed at the Fairmont, he acknowledged that "certainly you will see a lot of very well-known people in the hotel on a regular basis."

On the downside, Mr. Zugger said the Fairmont has siphoned some high-end business away from other hotels Downtown. But he said it also has pushed hotels to improve their offerings to stay competitive.

"We do compete with the Fairmont, so we all probably do have to raise the bar a bit," said Mr. Zugger, general manager of the Doubletree by Hilton Hotel & Suites Pittsburgh Downtown.

The Fairmont was brought to Pittsburgh as part of the development of 23-story Three PNC Plaza complex, which was completed in 2009 for PNC Financial Services Group. The hotel shares the building with offices and condominiums.

"PNC recognized in 2006 that there was a need for a top-tier hotel in Pittsburgh. The Fairmont has filled that role and more, helping to bring significant new development Downtown and enhancing the city's room capacity and allure as a convention destination," said Gary Saulson, PNC's director of corporate real estate.

Craig Davis, vice president for sales and marketing for tourism agency VisitPittsburgh, said the city is attracting a lot of corporate travel these days. He said much of that is because of the overall health of local companies and the emergence of the Marcellus Shale industry. But he also thinks the Fairmont has played a role.

"It really has changed our business mix. We've become very much a business travel destination, and this hotel is a favorite among business travelers. It's the sort of hotel the sophisticated business traveler seeks out," he said.

Mr. Popovich said most so-called second-tier cities the size of Pittsburgh don't have a hotel of the Fairmont's stature. "It's a good calling card," he said.

Mr. Sterne said the hotel attracts well over 100,000 people in a year, either as guests, in its bar or restaurant, in its fitness facility or for some other purpose. In fact, the hotel has seen a significant increase in wedding receptions, brunches and rehearsal dinners in its short life.

"I think the product and the service that we've been able to offer to the Pittsburgh marketplace -- there's been a demand for our property, and as a result it's been very successful," he said.

Mr. Sterne said the hotel's average occupancy rate is "pretty consistently" in the mid-70 percent range, which is considered to be very good by industry standards. Last year, the average for all hotels Downtown was 65.1 percent, according to Smith Travel Research.

In a J.D. Power online survey, guests voted the Fairmont Pittsburgh first in customer satisfaction for 2011 among the 37 Fairmonts in North America, beating out such illustrious properties as the Fairmont San Francisco and the Fairmont Chateau Lake Louise in Alberta, Canada. It ranked fifth among the 61 Fairmonts worldwide.

The J.D. Power survey measured a variety of categories, including the arrival experience, the room experience, the food and beverage experience, overall guest service and the health club.

The Pittsburgh property also has been recognized for brand service excellence by the Fairmont chain.

"For us, it's really the pinnacle within our brand for guest service," Mr. Sterne said. "It's a very well deserved award for the workers. They're really a committed group. They're committed to great guest service."

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

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(c)2012 the Pittsburgh Post-Gazette

Visit the Pittsburgh Post-Gazette at www.post-gazette.com

Distributed by MCT Information Services



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