In The News

Philadelphia hospitality industry to close 2016 strong


Published: Jan 3, 2017

By Kenneth Hilario

Philadelphia Business Journal

Anchored by strong activity in both the leisure and meetings and conventions sectors that reinforced Philadelphia’s image as a destination, Center City is set to close out the year with record hotel occupancy once again.

2015 is a tough year for Philadelphia’s hospitality industry to follow. After all, a record 41 million people visited the five-county region, marking the sixth-straight year for visitation growth as well as the first time the 40 million milestone had been surpassed. Further, hotel occupancy was at 76.7 percent, the highest occupancy in nearly 70 years. Average daily rate and revenue per available room also hit highs.

Those figures weren’t flukes, it seems, as the trend will continue for 2016.

No official numbers have been released yet, but estimates have hotel occupancy levels at 77 percent for 2016, according to CBRE Hotels. Though it’s only a slight increase from 2015, it’s no less a record. Average daily rate, or ADR, and revenue per available room, or RevPar, are projected to see an increase of 5.2 percent and 5.6 percent over 2015 as well.

High occupancy figures are a sign of optimism for Philadelphia’s hospitality industry as a whole.

Contributing to this year’s blockbuster numbers were a push from this July’s Democratic National Convention, eight citywide conventions and major sporting events, and strong performances in the leisure sector, which included arts-and-culture institutions and restaurants.

“Philly continues to improve and add to its hotels, retail shops, arts-and-cultural attractions, festivals, and events and restaurants,” according to Visit Philadelphia. “And every year, there’s more to see and do. That brings visitors to our region, which we know helps the Philadelphia economy and stimulates local shops and restaurants.”

On the meetings and conventions side, the Pennsylvania Convention Center, which served as the venue for DNC caucus meetings and daily press briefings, hosted eight citywide conventions this summer alone, which combined generated an estimated economic impact of $192.2 million alone, according to the Philadelphia Convention & Visitors Bureau.

But it’s not just the meetings calendar that’s bringing in the big bucks; the leisure sector also has a hand in it. Increases in overnight and leisure visitation to the region have been the primary drivers of overall visitation growth, increasing 287 percent since 1997, according to Visit Philadelphia. About 88 percent of the 41 million visitors that came to the region in 2015 were here for leisure purposes.

Smaller-scale festivals are also contributing to the economy, including the Lantern Festival, which attracted 92,000 paying attendees from 50 states and 10 countries, according to Visit Philly, which said the number of big events and festivals that charge a fee have increased this year, boosting the economy.

Food tourism is a booming sector across the country, and that’s helping Philadelphia’s reputation as a destination. Not only have national publications heralded local restaurants, Philadelphia restaurateurs and chefs have also expanded into other markets, including Dizengoff, High Street and Amada in New York; Pizzeria Vetri in Austin, Texas, and Washington, D.C.; honeygrow in Washington and Baltimore, with Brooklyn set for next year; and HipCityVeg in Washington.

Fishtown-based coffee company La Colombe continued its nationwide expansion this year with its 20th café; its growth will continue next year with more cafés and the nationwide launch of its canned draft lattes to more than 2,000 stores in 36 states.

Philadelphia also saw impressive growth in breweries and distilleries this year.

Breweries that have expanded or opened this year — or plan to — include Yards Brewing Co., Neshaminy Creek Brewing Co., Roy Pitz Brewing Co., Wissahickon Brewing Co., and startup brewery Locust Lane Craft Brewery, among others.

The spirits world is also on the rise, including Manatawny Still Works that will open a tasting room on East Passyunk Avenue; startup craft distiller Pennsylvania Distilling Co. that will open a distillery in Chester County; Philadelphia Distilling which relocated to Fishtown from Northeast Philadelphia; and Federal Distilling Room, which opened in August in Kensington.

The upcoming year looks like it could also be a blockbuster year, with a number of citywide conventions coming to town, including the NFL Draft in April that’s estimated to bring over 200,000 people, generating $80 million in economic impact for Philadelphia; and more hotels and hotel rooms coming online.

Big things are happening in the leisure space, too, including the openings of the Museum of the American Revolution in April and the Legoland Discovery Center in Plymouth Meeting in the spring, and the reopenings of Love Park, and the Main Fountain Garden at Kennett Square’s Longwood Gardens after a two-year $90 million renovation.

Airbnb, legalized in Philadelphia in 2015, and Uber and Lyft, legalized this year, could also have large implications on the hotel and destination marketing industries.