Oct. 02–The group behind a hotel proposal at the Little Pete's restaurant site has ceased efforts to develop the project as a Hudson Hotel, as the trendy New York boutique brand's parent corporation faces uncertainty.
Carol Horne Penn, project director for Chancellor Hotel Associates, told City Council members Wednesday that the project near Rittenhouse Square would be built under the banner of Hyatt's boutique Centric brand instead.
The shift follows reports that Morgans Hotel Group, owner of New York's Hudson, had been identified as a merger target by California-based SBE Entertainment Group, which owns the SLS hotel brand. SBE plans an SLS hotel in Philadelphia with local developer Carl Dranoff.
"When the opportunity surfaced to bring a Hyatt Centric property to Philadelphia, we knew it would be a great fit," Penn wrote in an email. "This is an exciting new brand, and we believe visitors and residents will love the Hyatt Centric experience."
Chancellor had said as recently as June that it was in negotiations with Morgans to use the Hudson moniker for the 310-room hotel it planned for the site at 17th and Chancellor Streets.
Uncertainty over Morgan's future likely played a role in Chancellor's decision to seek a different partner, said Peter Tyson, a senior vice president at PKF Consulting/CBRE Hotels, who had advised the developer early in the proposal.
The Wall Street Journal reported in August that SBE chief executive officer Sam Nazarian would become CEO of the combined company if a merger with Morgans occurred.
Shareholder Rambleside Holdings later said the merger terms being discussed would undervalue Morgans' assets and offered to buy the New York Hudson and a Florida hotel from the chain, while saying it may bid for the entire company.
"The Morgans house is having challenges," said Tyson, who had no direct knowledge of Chancellor's thinking. "It doesn't make a developer feel comfortable."
Chancellor also may have determined that it would have an easier time securing a construction loan for the project if it aligned itself with a better-known entity, such as Hyatt. The Hyatt Centric boutique brand "basically mirrors what the Hudson was going to be, but with brand clout behind it," he said.
Robyn Nentwig, a Morgans spokeswoman, said the company had no comment.
Chancellor's Penn discussed the shift to the Centric brand at a meeting of the City Council's rules committee, during which the body endorsed a zoning change for the development site to permit a higher building there than now allowed. The full council may vote on the change as soon as Oct. 8.
Penn, who is also a vice-president of the project's builder Clemens Construction Co., said that the developer was helping Little Pete's find a broker to assist it in finding a new Center City location.
Little Pete's co-owner John Koutroubas said after the hearing that he did not know how long the landmark eatery would remain in business or whether it would be able to find a new home.
"They'll try to find us a new location," he said as he dashed from council chambers ahead of his restaurant's lunch rush. "We'll see what happens."
The Centric project would be Center City's second existing Hyatt-branded property, after the Bellevue. The former Penn's Landing Hyatt is now a Hilton.
Hyatt rolled out the Centric brand in January, promising centrally located properties with what it described as "eclectic and fun" designs.
It has Centric hotels in the Loop business district of Chicago and Miami's South Beach, according to its website. The company said in January that it planned 15 Centric locations in cities including New York and Paris.
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