Plenty of room to be concerned Tourism: Enthusiasm over the Baltimore Convention Center expansion is tempered by fears over intense competition and a lack of marketing money.

March 17, 1996|By Gary Gately | Gary Gately,SUN STAFF

Just six months before completion of the Baltimore Convention Center expansion, giddy anticipation is tempered by mounting doubts about whether the center will reach its potential to fill hotel rooms, generate millions of dollars in new tax revenue and create thousands of jobs.

The $150 million expansion, one of the most expensive publicly financed projects ever in Baltimore, is at risk of falling far short of expectations mainly because of a lack of marketing money, say tourism experts, business leaders, lawmakers and industry analysts.

While competing cities have steadily invested millions more to attract conventions and tourists, Baltimore has slashed already meager spending for the agency charged with attracting business and leisure travelers. Today, the Baltimore Area Convention and Visitors Association, with an annual operating budget of $2.8 million, struggles to compete with counterparts spending two to three times as much.

As Carroll Armstrong, a San Diego Convention Center executive, prepares to take the helm as the Baltimore agency's first permanent chief in nine months, the competition is fiercer than ever.

Increasingly looked to as sources of economic windfalls, American convention centers have tripled in number to about 350 since the late 1970s. Exhibit space has increased 40 percent in the last seven years alone. Some industry experts predict a major shakeout and costly failures, as supply of space outstrips demand and budget-conscious executives restrict travel.

All of which helps explain why leaders of the Baltimore association have pleaded again and again for more marketing money. Through changes in the association's leadership, Mayor Kurt L. Schmoke's hostile takeover of its governing board and deep cuts to its budget, the impending convention center expansion, the planned addition of hundreds of millions of dollars worth of downtown attractions, the argument has remained consistent: The lack of marketing money imperils the city's $1 billion-a-year convention and tourism trade and jeopardizes taxpayers' investment in the convention center expansion $100 million from the state, $50 million from the city. In recent months the convention bureau has been joined by legions of business leaders, hoteliers, top state officials and lawmakers in making the case for more money. The heightened sense of urgency comes amid some troubling signs:

An independent consultant's study, commissioned by the Greater Baltimore Committee, warned of "severe erosion" of the city's convention and tourism industry unless "woefully inadequate" spending for the convention and visitors association nearly doubled immediately. The study, by Economics Research Associates called that amount the minimum to put Baltimore "in the ballgame." Much more would be needed for television advertising and to effectively compete with rival cities' slick marketing and intensive direct-sales pitches targeting conventions and trade shows.

Convention center bookings, according to new statistics, fall short of earlier, rosy projections that formed the basis for the expansion. After an initial increase in bookings, expected for a newly expanded center, the number of major conventions typically booked three to five years in advance drops precipitously in 1999 and 2000. That has fueled doubts about whether the center would realize its promise of pumping an additional $336 million into the state's economy annually, generating $15 million in additional annual state and city tax revenue, and creating 6,600 jobs by 2000.

As direct competitors raised convention bureau spending an average of 16 percent in the past two years, the Baltimore association's budget has declined 20 percent, to $2.8 million. (About $2 million comes from the city, the rest from the private sector.) Unlike almost all of its competitors, the Baltimore bureau has no dedicated source of annual funding. And the proportion of the city's hotel room tax revenue the agency has received dropped from nearly 50 percent in 1984 to 22 percent today.

Growth in hotel room tax revenues, a barometer of travel to the city, fell sharply between 1990 and 1995, despite the opening of Camden Yards, a major draw for downtown, and the increase in the tax rate from 6 to 7 percent in 1991. Between 1985 and 1990, hotel tax revenues rose an average of 20 percent a year. Between 1990 and 1995, the increase in the room tax revenue,now about $8.7 million a year, averaged just 4.5 percent.

Failure to invest in promotion has cost the city dearly, according to a recent convention bureau report. Based on an analysis of trends in Baltimore and four other cities, the agency concluded that if the city had spent a total of $2 million more over a six-year period, the investment would have generated $97.5 million in spending at hotels, nearly $7 million in city tax revenues alone and 1,500 jobs.

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