David L. Lawrence Convention Center hotel idea fading

Almost since its inception, the plan to build a 500-room hotel attached to the David L. Lawrence Convention Center has been a tough sell. It may be even tougher now.

With the decision by St. Louis-based Drury Hotels to convert the Federal Reserve Building on Grant Street into a 180-room hotel, there are now three hotels and more than 650 rooms in the works within several blocks of the convention center.

For some, that all but seals the fate of the megahotel long seen as the companion to the convention center but one that has never been able to get off the ground, even with significant public subsidies available.

"That horse has left the barn. I honestly believe there's not enough subsidy to do it. The fact there's going to be additional rooms created around the convention center, I would say that's a good thing," said state Sen. Wayne Fontana, D-Brookline.

Mr. Fontana, board chairman of the Pittsburgh-Allegheny County Sports & Exhibition Authority, which has been trying for a decade to build the hotel, said that while having the three hotels nearby might not be the "ultimate situation, it's the next best thing."

The high-end Drury Inn and Suites, expected to open in late 2015, supplements the two other hotels in the works in the vicinity of the convention center.

A 249-room Hotel Monaco to be operated by San Francisco-based Kimpton is set to open next summer in the James Reed Building on Sixth Avenue about three blocks from the convention center. A block away, the upper half of the Henry W. Oliver Building is being converted into a 230-room Embassy Suites Hotel.

While it would be "more ideal" to have a hotel attached to the convention center, the three being built in the vicinity are "kind of the next best thing," county Executive Rich Fitzgerald said. "The need is probably not as imminent when you have other hotel rooms popping up in the proximity of the convention center," adding the megahotel "is more on the back burner" right now.

The convention center hotel has been in limbo for some time. Three hotel companies, including Hyatt Hotels Corp. of Chicago and Omni Hotels & Resorts of Irving, Texas, were finalists in a request for proposals for the hotel put out by the SEA in 2010.

But no deal was ever reached, in part because of the lack of public subsidies available. Forest City Enterprises originally was selected to build the hotel but could never make the numbers work.

At one time, the state earmarked $34 million for the hotel, but that was not enough to convince developers to take on the project and that money has since been reallocated for other purposes.

Mr. Fontana said the lowest subsidy sought by those responding to the request for proposals totaled more than $50 million. All three of the hotels being built near the convention center are privately funded.

While Mr. Fitzgerald said funding for a convention center hotel is something he could revisit with the state and the legislative delegation at some point, he didn't appear to be in a hurry to do so. "That's certainly something we could look at, but I certainly wouldn't put it at the level of transportation funding right now," he said.

Even Craig Davis, CEO of local tourism group VisitPittsburgh, which has been championing the convention center hotel for years, conceded that having three hotels being built nearby makes drumming up support for the project tougher.

"It's going to make it more challenging. It always goes back to supply and demand. When the supply increases, there will not be a push for the convention center hotel until demand exceeds supply," he said.

At the same time, he called the additions a "good thing" in helping to attract conventions.

While Mr. Davis noted that his discussions with political officials regarding the convention center hotel have been "very positive," he said the chief stumbling block continues to be the subsidies needed to make the project work. For now, he doesn't plan to press that case.

"I would not feel comfortable having a discussion about subsidies with three hotels coming out of the ground. We need to fill those hotels and move on," he said. "I want to see what the effect of these hotels is going to be and how the market reacts to them."

Nonetheless, Mr. Davis stressed that Pittsburgh is competing for tourism dollars with other cities with very large hotels connected to their convention centers. Cleveland, he said, is building a 600- to 650-room hotel attached to its center. Boston is considering a new hotel of up to 1,500 rooms that would be built next to an expanded convention center.

Competing for convention business "will be a challenge" until Pittsburgh has the same type of product to sell, he argued.

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

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