The 341-room Hilton Harrisburg, the landmark project that lead to a downtown renaissance in the 1990s, and the upscale dining restaurant, Bricco, have been sold to Greenwood Hospitality Group, a Denver-based hotel investment and management firm.
The announcement was made June 29 by Mayor Linda Thompson, along with Russell C. Ford, president and CEO of Harristown Enterprises Inc., which built the Market Square hotel in 1990 as part of Harristown’s downtown revitalization efforts.
Thompson praised the sale because, she said, it showed the investment potential global investors see in Harrisburg and also because it frees the city of the millions of dollars in bonds it had backed for the hotel.
“Although the hotel has always paid this debt as scheduled,” Thompson said, “the fact that nearly $17 million in city-guaranteed debt has been permanently removed from the city’s balance sheet as a result of this transaction in an important outcome benefiting the city.”
Harristown’s hotel debt is not related to the city’s $326 million incinerator debt. Thompson said the city’s receiver, William Lynch, was consulted about the sale, though not required to authorize it, and gave his blessing.
Ford said Harristown decided to sell the hotel because it wanted resources to do more economic development projects in the city.
“We’ve looked at a number of ways to help this city,” he said. “This transaction does allow us to recover resources and re-invest them.”
Neither Ford nor Thomas W. Conran, a principal of Greenwood who works out of Hartford, Conn. and will oversee the hotel, would discuss the sale’s financial terms.
“It’s a purely private transaction,” Ford said, explaining public dollars used to help finance the hotel’s construction 22 years ago had long been paid off. And despite the city backing the bond financing, the hotel is a private business.
According to Dauphin County tax records, the hotel and its .77 acres of property combined are valued at nearly $20 million, on which the Harrisburg Hilton paid nearly $111,000 this year in county taxes. The hotel paid $148,870 in city real estate taxes and $404,074 in school taxes.
Conran said Greenwood, which has ownership interest or operates hotels in eight cities around the country including Baltimore and Princeton, N.J., intends to spend in the range of $5 million over the next three years upgrading and updating the hotel’s guest rooms and public spaces.
At the moment, there appears to be no plans for Bricco, which opened in 2006 at the corner of S. 3rd and Chestnut streets. Greenwood owns not only the hotel’s and restaurant’s businesses but also the properties.
Greenwood, which had been working with Harristown over the last year to purchase the hotel, has negotiated a long-term agreement with the Hilton and intends to keep the hotel’s 400 employees, half of whom reside in Harrisburg.
“Everyone over there will keep their jobs,” Thompson said at the press conference at City Hall, directly across the street from the hotel.
In addition, Bill Kohl, current president and CEO of the Hilton Harrisburg, will stay on in a management role as well as become a principal at Greenwood. Conran said he and Kohl have known one another for more than 25 years.
Tax abatements to help start the hotel two decades ago have long expired. City and Harristown officials said the hotel pays significant business and property taxes as well as generates more than $120 million in economic activity downtown.
“It’s a tremendous economic generator,” Kohl said.
Moreover, Thompson said, the millions of dollars in upgrades and renovations that Greenwood intends to make could lead to a reassessment of the property and potentially more tax revenue for the city.
While the Hilton brand and quality staff helped attract Greenwood’s interest, it was the hotel’s solid, consistently top-performing financials in a sound market that convinced the management group to make the purchase, Conran said.
Conran dismissed questions about whether the city’s fiscal troubles, known internationally, concerned Greenwood. “There’s a lot of chatter,” he said. “We believe the best days of Harrisburg are ahead.”
