Hotels and Hospitality

I believe hotels and lodging are a hole in Pittsburgh’s economy waiting to be filled.  What got me thinking on this topic, just when I was afraid that after two blog postings I had run out of ideas for thinkingPittsbugh?  A stroll across downtown Austin headed to a friend’s condominium in the W Hotel inspired me.   No it’s not the W Hotel that has me thinking – in my opinion the W chain is simply a limited amenity/high price point product that if you want something “hip” better to stay at the local Aloft.  Most of the time W hotels are only marginally comfortable and oddly styled.  If Pittsburgh never sees that marque on its skyline it will validate the City’s reputation for integrity.

 

No, I was passing the gaping block long crater on Congress  Avenue that will become the Austin JW Marriott.  JW Marriott is relatively upscale and sized large for convention business.  This is the big hole in Pittsburgh’s hospitality offering and one that many in City Hall, the Convention and Visitor’s Bureau, and more than a couple developers have been trying to fill for decades.  More certainly since Pittsburgh’s shiny, acclaimed LEED Platinum convention center opened up.  So why is Austin, with a convention center half the size of Pittsburgh’s, not to mention a smaller airport and overall population, getting this 1,000+ room monster as well as a new Westin and Fairmont downtown?  “Hospitality” is my theory.

 

A knowledgeable friend who manages real estate investments for wealthy foreign investors tells me that his clients basically trust three markets in the world: London, New York and San Francisco; and mostly just the first two.  So with that as background he takes a very skeptical view of supposed tier one markets in the US, Austin being one of those along with Boston, DC, and Los Angeles, among others, and tier two and below markets, where Pittsburgh lies.  Right now he says it is almost impossible to obtain financing for large hotels on either the construction loan phase or the long term take out that commercial investors provide.  Obviously up front equity is key to getting a project out of the ground.  But what determines the environment where deep pocketed equity partners fund a large hotel project?

 

Turns out it’s more apparent than one would think.  The city where a project gets built needs to have a reputation, a culture, a history of hospitality.  Think New York, New Orleans and San Francisco.  Places that welcome visitors as well as have attractions that people want to see.  How did Austin get on that list having only been around for some 100 plus years and with maybe a live music and a restaurant scene a little different than most other places?  Well, that’s exactly how it got on that list.  That and hard work by folks who believe they have reasons people will spend travel dollars to access a concentration of live music, a whole bunch of Tex-Mex restaurants, and a college town atmosphere where bar hopping in fewer than the usual amount of clothing is not considered anything to be remarked upon.

 

They put that together and came up with what I call The Big Three: South by Southwest Music Festival [expanded to Interactive Media, Film, and Education festival weeks], ACL Music Festival [about to go to two separate weekends], and now, Formula One racing on the only dedicated F1 track in America [strategically situated driving distance from Mexico and a short flight from the rest of Latin America].  I won’t go into the economic details of these three events.  Let it stand that all three bring in visitors for at least a week, with SXSW accounting for over two and a half weeks of activities.  Each event brings in over 100,000 visitors who are ready to spend money on a good time.  And with SXSW, where corporate sponsors and attendees use it as essentially a marketing event, the money spent on local hospitality is astounding.  Hotels are filled for literally 70 miles in all directions.

 

The economic benefits are many and varied but to the point of this post, it’s how three events can really generate the business to sustain both hospitality and general development in hundreds of millions of dollars and adding thousands of jobs.  My aforementioned real estate investor friend confirmed to me a while back that the economics for hotel owners is simple.  During the total six weeks these events represent annually, the room revenue is high enough [sometimes triple and always at least double rack rates for the rest of the year] that the hotel operators make their base line revenue within these weeks.  The rest of the year is gravy.  And those new condo towers in downtown Austin with prices that few locals can afford?  Well, local reports note that eight condos valued over $500K each were sold in one building as a result of F1 weekend.

 

Pittsburgh is a city of “real men” who “build things”.  That’s engrained in its collective DNA; its mental image of itself.  Whether the resident is actually male or female, it’s the internal perception that creates a big part of the reality.  The most common factor spoken by local economic development officials whenever the Pittsburgh area scores a development win: XYZ Company came here due to the “work ethic” of local residents.  There is little room for partying in Pittsburgh, nosireebob.  Jobs related to hospitality and entertainment are somehow second rate.  The question needs to be asked, “Really?”  When good hospitality jobs pay more than average salaries in most other business sectors, when an outsider’s perception of a city as being enjoyable can lead to future investments, and when a welcoming environment yields overall benefits to the quality of life, can anyone still say a city, Pittsburgh or any city, doesn’t need more party?  Laissez les bon temps roulez!   Government officials, third-party economic development agencies, and energetic local boosters of all stripes need to encourage “hospitality”.  Entertainment events involving collective activities centered on enjoyment, that is.  The City has examples already of how the Steelers and Penguins generate economic vitality downtown whenever they are playing.  Fun should not be only related to sitting in a seat watching a sporting event.  It’s time to get creative on the fun factor, Pittsburgh.

Of Friendly, Welcoming and Growing

I’ve been thinking lately of similarities and differences between my current hometown, Austin, TX [yes I’ve just outed myself on that one] and former hometown, Pittsburgh.  At some future point I’ll detail why in my opinion Austin and Pittsburgh are so uniquely similar, and similar in unique ways.  But for this posting I draw on conversations over the years of living in each place.  I believe I have now reached a point where I have lived in Austin for as many years as I lived in Pittsburgh.  OK, for clarification, I grew up and resided through college in “the Pittsburgh area”.  The City line was about five miles up the road from my burg.  To Pittsburghers, that’s an important distinction.  Michael Chabon, another nominee in my pantheon of Pittsburgh saints [even though he currently writes from “Bizerkeley”, CA] lectured one night at Southwestern University in Georgetown, TX about 15 miles north of Austin and I was fortunate to have attended.  He began the lecture by explaining to the gathered Texans that even though he loved Pittsburgh, and wrote lovingly of it, AND considered himself a Pittsburgher, to “native” Pittsburghers he would never be one.  He noted that Pittsburgh’s a place where, close to quoting him here, if you were born just a step outside the City line, and the moment you could take a breath you were whisked across that line into Pittsburgh, you would not be considered a “Pittsburgher” by the City’s natives.  I believe the audience shared the joke partially because Texans resemble that remark.

But this leads me into my comment for this post.  Years back I had lunch at the Holiday Inn in Pittsburgh’s Oakland section with a “mover and shaker” who directed a joint effort between CMU and Pitt to incubate technology companies from the universities’ academic pursuits.  He said something that I have carried with me ever since: “Pittsburghers are friendly but not welcoming”.  And he meant it as an indictment resulting in an impediment to growth.  He said that enterprises found it easier than one might think bringing talent into Pittsburgh as their initial impressions were usually good and they found the social climate “friendly”.  [I seem to remember local TV station KDKA in the 70s used the moniker “The Friendly City”.]  The problem was that those new transplants too often left after a relatively short amount of time.   In leaving, they took ideas, training and often whole enterprises with them.  And where did they go?  Places like Austin, but also other places either more socially welcoming like North Carolina and Atlanta or places more economically wide open like Seattle and the Silicon Valley.  The mover and shaker believed that along with more developed sources of capital funding, a more welcoming social net would equalize in and out migrations to something consistent with economically dynamic cities.

Think of why you shop at a particular hardware store, frequent your preferred airline, or settle in a certain neighborhood.  I’d be willing to bet these and dozens of similar decisions are made due to social bonds.  People who welcome us into their lives get a hold on us that makes all the other things around us fade to the background; one example being your neighborhood.  You love your ‘hood.  You grill with neighbors and share the picnic.  You gossip over a glass of your preferred refresher.  You worry about someone up the street who you haven’t seen in while.   Sure, in the midst of all that you don’t like the paint color on a neighbor’s house.  Or worse, the crying need for fresh paint, whatever the color.  Maybe there appears a wall with graffiti a couple blocks over nearer the highway.  Or you’ve reached the end with a neighbor’s dog using your front yard as their latrine.  But overall, the social network keeps you grounded to your neighborhood.  And as a result, you’re reluctant to leave for another part of town, or part of the country.  For newcomers, THAT’S what was missing in Pittsburgh, I’ve been told.

I contrast that view with Austin.  Back in the 90s when I first moved here there was a guy in my startup company who was originally from Cleveland, OH.  He even graduated from UT’s football rival Ohio State.  He told me the reason he settled in Austin was that after motorbike touring the country during his vacations, he never encountered a place as “welcoming” [his words] as Austin.  I hear that same comment all the time in the local Austin media.  After big events such as ACL Fest and SXSW you’ll hear and read of entertainers, business people or just participant fans say they decided to look for work or housing and move here because so many people open their homes, hearts and attitudes to them.

Pittsburgh has come so far economically in the last 20-plus years so it’s now seeing higher in-migration.  And often Pittsburghers will ask newcomers, sometimes sheepishly fearing a veiled put-down I suppose, “Why did you move here?”    By contrast, I interact daily with Texans who are not only natives, they are fifth and sixth and beyond generation natives.  And their attitude to me is always “What took you so long to get here?”  So I end this piece with a question.  Or lots of questions.  What attitudes need to change?  Can you change the character of a city quickly enough to keep up with the pace of global economic change?  Can you rely on an initial core group of newcomers, perhaps themselves more open to other newcomers, to form the basis of social and economic progress?

Welcome - Some Initial Thoughts

Well, here goes; my first attempt at public blogging.  Well, it’s actually my first public blog realized.  Up front apologies to anyone reading this for whom it turns out to be not worth the time.  But as metaphysicians teach us, no energy is wasted.  So on to topics of Pittsburgh.

My goal here is to put out into the blogosphere topics of concern to those lucky enough to live in Pittsburgh and its surrounds as well as those interested in what happens to this essential American city.

I am not currently fired up about any issue in particular, outside of Big Ben’s lackluster play during the 2012 season.  But since my aim here is not to devolve into discussion of Pittsburgh sports, unless it involves civic development, I’ll leave those thoughts to others with more knowledge of the topic.  As a kind and gentle first blogging, allow me to pay tribute to two individuals who should be recognized as Pittsburgh pillars.

The “Pittsburgh Quarterly” magazine, published and edited by Doug Heuck, is a civic treasure.  Doug’s contribution to the intellectual development of Pittsburgh needs to be acknowledged.  The magazine’s byline reads “where commerce and culture meet” and isn’t that two of the bedrocks of Pittsburgh’s development over the centuries.  Pittsburgh is an agora.  A place where individuals and ideas meet, manifest in the confluence of its three rivers.  As I was taught in urban studies class many years back, there are “natural” cities scattered across the planet.  And only a few in the United States: New York, San Francisco, Pittsburgh and maybe Boston.  Places where a “city” – a nexus of commerce – had to form due to natural, geologic and geographic forces.  Doug is continuing the forward movement of those forces in Pittsburgh. That’s hopefully stimulating others to expand the intellectual crucible placing Pittsburgh in the same commercial and cultural class as America’s other “natural” cities.

Can I nominate Holly Brubach to the pantheon of Pittsburgh saints?  She has written truthfully, poignantly, incisively and always lovingly of her hometown.  The list of Holly’s writings is found on Amazon.com as well as the archives of the New York “Times”, “The New Yorker” magazine, and several fashion journals.  She needs neither introduction nor praise from me.  But a piece she did for “Departures” magazine in the July/August 2012 issue rates a shout out even six months later.   Titled “In a Pittsburgh State of Mind”, simply put, Holly nailed it.  From the glowing photos wonderfully lacking in all the usual Chamber of Commerce shots [although for Pittsburgh we always want more of those to be spread around], to her prose that lightly touched on all that has changed over a couple generations but were mentioned only as a springboard to discuss the magic that is Pittsburgh, Holly showed an insight that makes a reporter an insightful story teller.  “Departures” is unfortunately not a generally available publication.  It’s the in-house pamphlet for conspicuous consumption of those possessing an American Express Platinum card.  [Note to readers: I acquired my issue from a friend.]  But we should all celebrate such a wonderful piece of writing aimed at a target demographic who should know more about Pittsburgh.