As hotel market fills out, Springwood starting on new hotel in Derry Township

By Jason Scott, June 13, 2018 at 10:46 AM in Central Penn Business Journal
A rendering of the new Tru by Hilton hotel that Springwood Hospitality is building in Derry Township.

A rendering of the new Tru by Hilton hotel that Springwood Hospitality is building in Derry Township. – (Photo / Submitted)


A York County hotel developer is starting on a new project in the Hershey area even as the hotel construction boom shows signs it could be slowing down in Central Pennsylvania.

Derry Township supervisors on Tuesday approved plans by York Township-based Springwood Hospitality to build a new Tru by Hilton hotel on a former bakery site on Hillcrest Road, which is on the west end of Hershey.

Springwood CEO David Hogg said his company plans to break ground next week on the five-story, 112-room hotel, which should take about a year to build.

Tru is more of an entry-level hotel for Hilton. Rooms cost about $100 per night and the hotel is designed to attract younger millennial travelers, but with a price point and amenities that might appeal to older travelers as well.

While Hogg is happy to start on the Tru project — one of several active sites for Springwood in Central Pennsylvania — he admits it is getting harder to develop hotels locally.

The York County company is among a handful of developers that has been busy building new hotels in Central Pennsylvania over the last two or three years as the economy has improved. The last development boom in hospitality was before the recession.

But land is getting scarce, construction costs are rising and a tighter labor market is making it harder to find staff to run hotels. The labor shortage is pushing up wages and benefits, which is squeezing profit margins for hotel developers.

“The market controls the price of room nights. Wages impact our margins,” he said. “It makes it more difficult to develop looking forward.”

However, high net-worth investors are increasingly interested in real estate projects, especially hotels, because they offer diversification out of the stock market and provide consistent cash flow each year.

To satisfy that investor appetite, Springwood is looking to expand into the Lehigh Valley and push deeper into Maryland for projects. The company has a second hotel opening this summer in Frederick, Maryland.

Hogg also cited Delaware and New Jersey as possible expansion markets for his company.

“We’re always looking to make a match work,” he said.

Hotel development also could continue in growing areas of Central Pennsylvania such as Cumberland County.

Other developers have said they see potential projects built near mini-casinos. There are three casino projects slated for the region: in the Cumberland/Franklin area, in York County and in the Lancaster/Berks area.

Hotel pipeline

Many of the new hotels that have been built in Central Pennsylvania are all-suite hotels that cater to corporate travelers staying for multiple days, and hotels with limited food-service operations and little meeting space. The construction also is bringing in new brands developed by hotel chains such as Hilton and Marriott, which are looking to introduce their latest brands to smaller markets.

Tru and Home2 Suites are the newest Hilton concepts that have been expanding rapidly, while Marriott has been adding new Courtyard and Fairfield Inn & Suites hotels.

Springwood helped bring both new Hilton brands to Central Pennsylvania. The company was just recognized by Hilton for its Lancaster County Tru, which Hilton named its new build of the year for Tru in 2017.

“I think it’s reflective of the relationship we have with Hilton,” Hogg said.

In addition to building Tru and Home2 hotels, Springwood has built Homewood Suites and Hampton Inn & Suites for Hilton.

And his company is not planning to slow down.

The Hershey Tru project gets underway as Springwood prepares to start construction on a Home2 at Progress Avenue between Valley Road and Brindle Drive in Susquehanna Township, just in front of the Shoppes at Susquehanna Marketplace.

The hospitality company also is wrapping up construction of a Home2 at the Shoppes at Belmont in Manheim Township, Lancaster County, which is slated to open in August, and it is preparing to start construction later this summer on a hotel that will combine the Tru and Home2 brands in Northampton County.

When it opens, the Belmont Home2 will be Springwood’s 11th active hotel .

Hogg said his company will remain opportunistic and continue to build hotels in Central Pennsylvania, if the right sites emerge.

Springwood is interested in bringing new brands to market for both Hilton and Marriott, which could include redeveloping old sites in urban areas. Hogg also would love to round out his company’s portfolio with existing brands, including Residence Inn and Courtyard, both Marriott hotels.

“We’re always looking, but there are not very many brands you can do and there are not many locations where it makes sense,” he said.

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Home2 Suites Frederick, MD Opens Today!

2FM Team Ready to Open

Our freshly-trained and enthusiastic crew (above) at the brand new Home2 Suites Frederick, MD is ready to greet their very first guest. This is so exciting, every time we open a new hotel.

Congratulations for the hard work of so many who contributed to make this opening happen on time. There are stories behind the success…

We’re looking for a fast start out of the box for this well-placed hotel in the metro Washington, DC market. The Frederick County economy is healthy now that it has become a biotech hub for the eastern United States.

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Springwood’s Hilton Relationship Makes News Again

Tru_Hershey_Front_Final BoardYou may read the April 11, 2018 article in Central Penn Business Journal  HERE.

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Hilton Improves the Affordability of Tru

17-1-27hJustin Shelton of our office has been busy helping Hilton whittle down the development costs of its new Tru brand. Springwood opened the third and the sixth Tru by Hilton hotels in the world, and Hilton has been capitalizing on the lessons we learned. Lean more in the following article: Hilton Brings Better Affordability to Tru

By actively listening to its developers and drawing out their participation in brand improvement, Hilton is establishing itself as a force to be reckoned with in the U.S. hospitality industry.

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Home2 Suites Changes the Market as U.S. Extended-Stay Segment Thrives

copy-of-home2-suites-by-hilton-york-exterior-1151004Mark Skinner of the Highland Group has written an informative article about the continued success of the U.S. Extended-Stay segment of our industry. You can read it HERE. 

What I find fascinating about the article is that the extended-stay segment is claiming essentially all of the RevPAR growth in the U.S. at the moment. How could that possibly be? The answer, in my opinion, is Home2 Suites by Hilton.

Nearly 100 new Home2’s will open in 2017. In other markets where a Home2 is already in the works, some developers are opting to build TownePlace Suites by Marriott instead, so those markets will see two new extended-stay products opening.

Now, TownePlace has been around for a while and it’s a good brand, but Home2 has redefined and re-energized the upper-midscale extended-stay market. There will be as many Home2’s as TownePlace’s around within a year or two, and Home2 has only been around half as long as its Marriott counterpart.

This rapidly expanding segment if giving travelers new, popular choices they never had before. Is it any wonder that extended-stay is hogging the revenue growth in the U.S. hotel market?

My prediction is that we will see renewed market share growth in the mid-scale segment over the next two years, which will be primarily attributable to Hilton’s new Tru brand. This upstart brand is slated to zoom from zero to 250 hotels open in just over 1.5 years, making it the fastest-growing hotel brand in the history of the U.S. industry. Watch for it.

Dave Hogg

PS. Full disclosure: Springwood uses the Highland Group for nearly all of its new hotel feasibility studies, because they seem to get it right.

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Tru by Hilton Lancaster Spotlighted for Innovation by BASF

01 The New TRUYou can read the BASF article on Springwood’s Tru by Hilton Lancaster, PA HERE.

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Springwood Makes News in the Lehigh Valley

You can read the article from The Morning Call HERE.

02 Behind the Front Desk

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