Expansion put on hold

Concerned about 2nd Wind Creek hotel, seeks more time to claim city tax incentive

Wind Creek's plans for a second hotel in south Bethlehem helped prompt the Hotel Bethlehem to seek more time to tap a special tax incentive needed for its own planned expansion on historic Main Street.

Hotel Bethlehem managing partner Bruce Haines said building both projects could “create excess hotel and meeting space capacity” in the current market, making it a tough sell to potential investors.

In his extension request, Haines called Wind Creek's plans the “largest deterrent” to Hotel Bethlehem's expansion plans, which he pitched in 2017.

Beyond Wind Creek, there are 400 additional guest rooms from three new hotels in Bethlehem and Center Valley in Upper Saucon Township, Haines said.

In November, Wind Creek Hospitality filed plans with the city for a 12-story hotel that would include a spa, bar, ballroom and more meeting space at the south Bethlehem casino it bought this year from the Las Vegas Sands. The $90 million hotel would be near the existing 282-room one. It would include 270 guest rooms and 36,000 square feet of meeting space.

Haines said he wants more time to see how the market absorbs Wind Creek's project

and what other factors might come into play. If the downtown lands a Fortune 1000 company, for instance, or if Bethlehem is named a UNESCO World Heritage site — it’s on the U.S. shortlist — the outlook could improve. For now, Haines called the $37 million expansion “a viable longer-term plan.”

“I still think it’s a great project,” Haines said Monday. “At the right time, I think it can happen. I want to keep that option out there because I think it would be a good thing for the city.”

The expansion of the Hotel Bethlehem, a 1920s-era hotel, relies on it getting into the City Revitalization and Improvement Zone, which allows developers to tap certain local and state taxes to pay off construction loans.

The authority that oversees the CRIZ in March 2018 gave the Hotel Bethlehem two years to get the project off the ground. The authority will decide Thursday whether to extend the promise of the CRIZ incentive for another two years with the possibility of a twoyear renewal. The state ultimately must sign off on it.

A Wind Creek spokeswoman did not respond Monday to a request for a comment.

The Hotel Bethlehem expansion would include replacing the 100-spot parking deck with a 460-spot garage topped by four stories of guest rooms and an additional 25,000 square feet of meeting space. That would double the size of the hotel.

Mayor Robert Donchez said the city still supports the Hotel Bethlehem project, noting the hotel’s historic niche is different than Wind Creek’s, which operates the casino and is contemplating family attractions such as a water park with its own hotel.

Alicia Miller Karner, director of the city’s community and economic development department, said the Hotel Bethlehem expansion project would be a great benefit to Main Street.

“We know that there continues to be interest in the development in new hotels in the city,” said Karner, also executive director of the city authority overseeing the CRIZ. “The CRIZ is an important tool to help the Hotel Bethlehem capitalize on that interest now instead of waiting to see how many hotels develop around it.”

Haines said the Hotel Bethlehem has a “Plan B” to make the business a boutique hotel if its larger expansion plans don’t pan out. About a year ago, the hotel unveiled 5,000 square feet of meeting space at 531 Main St. Last month, the hotel closed on a property at 462 Main St., where it operates the Hotel B. Ice Cream Parlor and plans to turn the apartments above into extended stay rooms. Meanwhile, the original hotel continues to be a popular destination, with its marble floors, grand ballrooms, upscale rooms and restaurants.

Discover Lehigh Valley’s annual report says the 2018-19 hotel occupancy Valleywide rates are doing better than the previous years’, topping 75% in the peak summer months. The average occupancy rate from January to December stayed steady at 70.6% in 2017 and 71.2% in 2018. In 2019, the average occupancy was 73.1% from January to November.

There were 16.5 million visitors in 2018 spending a total of $1.2 billion. Nearly a third of the trips were overnight trips. Visitors who stay the night spend an average of $121 per person; visitors on day trips spend an average of $52 per person.

The Hotel Bethlehem is on a section of Main Street that features shops and restaurants reflective of the city’s Colonial Moravian heritage. The hotel sits near the spot of the First House, a log home where the Moravians celebrated Christmas Eve 1741, when the settlement was named. It later became the site of the Golden Eagle Hotel, which closed in 1919, and the Hotel Bethlehem opened in 1922. The hotel was a lavish example of the wealth the city wielded with the rise of Bethlehem Steel following World War I.

In 2016, Bethlehem’s original Moravian settlement — along with other landmarks including Chicago’s early skyscrapers and Ellis Island — made the U.S. Tentative List. The United States uses the list to nominate sites for the exclusive World Heritage designation already bestowed upon the likes of Independence Hall and Yellowstone National Park.