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400 Requests for Proposals Sent Out to Find Developer to Design and Build
 a 500 room Convention Center Hotel in Pittsburgh

By Thomas Olson, The Pittsburgh Tribune-ReviewMcClatchy-Tribune Regional News

May 22, 2010 --A Pittsburgh commercial real estate development firm and industry experts believe the timing is ripe for a 500-or-more-room convention center hotel to be built next to the David L. Lawrence Convention Center.

HFF Inc., the Downtown-based firm charged with finding a builder, started its search for prospective developers Friday by sending 400 requests for their proposals to design and build the long-sought hotel.

"We're looking for 500 rooms. That's the objective," said HFF Managing Director Mark Popovich. "It's going to be difficult to justify moving forward at anything significantly less than that."

Popovich expects about 10 groups will submit complete proposals. HFF will examine them and create a short list from which the city-county authority's board will select the development team.

The city-county Sports & Exhibition Authority, which hired HFF to conduct the search, hopes to select a development group by the end of summer. "Then it will be about trying to consummate a deal with them," said Popovich.

The number of guest rooms has been a moving target since a hotel was first envisioned in the early 1990s. Initially, the goal was 750 rooms.

The Sept. 11, 2001, terrorist attacks and subsequent recession hobbled the hotel industry, Popovich said. A few years later, oil prices and construction costs shot up. By 2008, Forest City Enterprises, the Cleveland developer finally chosen, said only 300 rooms were cost-justified, and plans were put on ice.

"The Pittsburgh hotel market is doing better than the U.S. in general," said Jeff Higley, vice president of Smith Travel Research Inc., a global hotel research firm in Henderson, Tenn.

Average occupancy rates at U.S. hotels last year dropped 8.8 percent but decreased only 3.5 percent in the seven-county Pittsburgh region, according to Smith Travel data. Year-to-date through April, Pittsburgh occupancy rates were up 5.9 percent over the 2009 period, compared with a 3 percent decline for the nation.

Pittsburgh hotels' average daily rates have held up better, too. They dipped 0.9 percent through April, whereas national hotels' average rates fell 3.4 percent, said Smith Travel.

In past years, a $34 million subsidy for hotel construction was to be provided by the state. There is no such earmark currently, said Popovich, "so it would be incumbent on respondents to seek out public money."


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