The $151 million convention wager Risk: The expansion of the Baltimore Convention Center is the opening move in a high-stakes gamble: Bonanza or boondoggle?

September 02, 1996|By Gary Gately | Gary Gately,SUN STAFF

A few steps from Bruce H. Hoffman's office in the brick warehouse at Camden Yards, a panoramic view of Oriole Park unfolds outside the windows, the green seats and manicured field glistening in the summer sun. Just beyond the ballpark lies the site of a planned new football stadium, the $200 million future home of the Baltimore Ravens.

But Hoffman, executive director of the Maryland Stadium Authority, fixes his gaze away from stadiums present and future and instead on the modern glass, concrete and steel structure his office overlooks: the Baltimore Convention Center expansion.

For all the civic pride and bragging rights associated with the stadiums, Hoffman says, neither will come close to the expected economic windfall from the convention center. "People don't realize that this building should bring more money into the city than baseball and football combined," he said.

Projections used to make the case for the $151 million expansion and renovation of the convention center suggest that it will pay off handsomely: Direct convention-related spending is expected to total $340 million a year, generating $30 million in annual city and state tax revenues, about 8,000 jobs, other downtown development and, possibly, a major new downtown hotel.

But the expansion, one of the costliest publicly financed projects ever in Baltimore, amounts to a $151 million gamble. Consider: The opening Friday of the new section -- twice the size and more than three times the cost of the 17-year-old original -- comes at a time when competition for a greater share of the $83 billion-a-year meetings industry has grown fiercer than ever. Dozens of cities have built convention centers or undertaken extensive expansions in recent years, tripling their number to about 400 since 1980, and the race to add space has, if anything, intensified. Some experts predict that a glut will lead to an industry shakeout and scores of costly failures within the next decade.

In an industry where major conventions typically reserve space three to five years in advance, Baltimore's bookings drop off precipitously by 1999 and 2000, falling far short of projections -- and well below current levels. Years of lax marketing, with the agency that markets the center scrimping on a half to a third of what competitors spend, is widely blamed for the dismal bookings.

While space in the expanded center will grow dramatically -- the exhibit area goes from 115,000 square feet to 300,000 -- Baltimore still lacks what many large convention and trade show planners consider a key ingredient: a "headquarters" convention hotel with 1,000 to 1,200 rooms. Several major chains are eyeing downtown Baltimore, but economic realities now almost always require bankrolling from a major developer and, often, government subsidies. Neither appears imminent.

Mayor Kurt L. Schmoke's hostile election-year takeover of the convention bureau board, just months after his repeated budget slashing led to the resignation of the agency's director last year, has fueled fears that political meddling could damage the long-term health of Baltimore's convention and tourism industry.

Room taxes could rise

Chief among the concerns: the prospect of financing the Baltimore Area Convention and Visitors Association and the city's $51 million share of the expansion by raising hotel room taxes, as the mayor has repeatedly threatened, a move that could drive away potential convention business in droves.

Carroll R. Armstrong, who took over in April as president of the convention bureau, acknowledged that the city must make up for lost time and a lack of marketing. But he added that he harbors no doubts about his ability to lead a rebound.

"The risk factor has increased tremendously because the demand for space is not keeping pace with the space that's been built," he said. "Some cities are going to win, and some aren't going to win. It's like entering the marketplace with a similar product. Your widget's got to be better than the other widgets."

Still, Armstrong said the expansion should pave the way for significant growth in Baltimore's $1 billion-a-year convention and tourism business. "We have the opportunity to move into the big leagues if we choose to do it," he said. "We aren't there, and part of the reason we aren't there is we've been playing minor league -- Double A and Triple A -- and that's what we know."

Making the leap, Armstrong said, will require thinking big and taking big risks, for both the private sector and government. Success, he said, will hinge largely on ensuring a dedicated source of money to lure conventions, as in almost every other city, and building a convention hotel with at least 1,000 rooms.

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