'It's Not Performing To Where We Want': World Cup Hotel Demand Lagging In Philly

The Philadelphia hospitality industry’s big summer isn't turning out as well as hotel operators had hoped, in large part due to lower-than-expected bookings around the city’s six World Cup matches.

Nearly 80% of hotel operators in Philadelphia reported bookings below what was expected in a nationwide American Hotel and Lodging Association survey released this week.

Host cities nationwide are struggling with hesitant international travelers and FIFA’s cancellation of thousands of rooms booked for its workers.

“It’s not performing to where we want it to,” Greater Philadelphia Hotel Association CEO Ed Grose told Bisnow. “We thought by now we would have more rooms booked.”

AHLA found that uncertainty about getting visas and broad concerns about the geopolitical climate were turning off international travelers in World Cup markets across the nation.

Their limited participation will have an outsized impact since international visitors tend to stay longer and spend more than domestic ones, Grose said.

The report also concluded that the large number of rooms FIFA booked and canceled created an “artificial early demand signal” that set expectations too high.

FIFA axed about 2,000 rooms in Philadelphia in March, which was roughly a fifth of the total block it has booked in the city. Some cancellations by the organization were anticipated, but Grose said the final number was larger than what the industry in Philly expected.

“Everyone knew the cutoff dates … We knew there would be adjustments,” he said.

“I don’t think anyone saw it coming that they would cancel as many as they did,” Grose added.

This opens up more rooms for consumers, who have tended more toward last-minute bookings in the wake of the pandemic, but he said it would have been good if operators in Philly had more time to make that pivot.

The AHLA report said bookings are below what would even be expected for a normal summer in Philadelphia. Grose said it was too early to tell if that was accurate.

He remained bullish on the World Cup and the publicity it could bring the city.

“The sky isn’t falling. We’re still very much looking forward to it,” Grose said.

“There are ancillary benefits that come with hosting the World Cup,” he added. “Our city is going to get international exposure.”

Grose also highlighted the other big sporting events happening in the Philly area, including the PGA Championship next week at the Aronimink Golf Club in Newtown Square and the MLB All-Star Game in July at Citizens Bank Park.

But the AHLA report highlights another potential headwind facing the Philly hotel operators in the form of a proposed hotel tax increase in the city’s 2027 budget.

Mayor Cherelle Parker is seeking to add 2% to the existing 8.5% tax the industry already fields from the city. That is on top of the 7% levee imposed by the state.

While the report says the existing 8.5% tax goes toward promoting tourism in Philly, the additional 2% would instead go toward addressing homelessness in the city.

Grose said he agrees that homelessness is an issue the city needs to address, but his organization is working with the mayor to identify alternative solutions to the tax increase.

“It’ll make us the highest-taxed city on the East Coast,” he said. “It’s just an overall bad idea, especially as we are trying to entice things like the Democratic National Convention to Philadelphia.”