Ground broken for hotel Wyndham officials say project will give city international exposure

Convention market eyed

Real estate

June 19, 1998|By June Arney | June Arney,SUN STAFF

Work has begun on the first new hotel in Baltimore in a decade, the 750-room Wyndham Inner Harbor East, touted as a project that will boost the city's international exposure, attract bigger conventions and extend harbor attractions eastward to Fells Point.

The $134 million project, which has been in progress for 2 1/2 years, will be 31 stories tall. All guest rooms will have a water view, and there will be two waterfront restaurants, more than 46,000 square feet of meeting rooms looking out on the harbor and a 600-space parking garage with retail space. The hotel is scheduled to open in September 2000.

"On a Sunday, you can see people walking here," John Paterakis Sr., president of H&S Bakery, who is leading a team of developers building the hotel, said in an interview before yesterday's groundbreaking.

"You can see it happening. Inner Harbor East is going to be the extension of the Inner Harbor, and that's what we want."

Paterakis said bringing the hotel to this point has not been easy. "If we knew of all the controversy, I'd have second thoughts," he said.

Once completed, the property will be owned by Patriot American Hospitality Inc. and managed by Wyndham International Inc., which became part of Patriot in January.

The project is being developed by Stormont Trice Corp., H&S Properties Development Corp. and H.J. Russell & Co. of Atlanta. Together, the three development companies will share less than 10 percent ownership.

"I know that what we're doing is the right thing for this city," said Mayor Kurt L. Schmoke. "I remember a few years ago we had something born of controversy, and it was called the Inner Harbor."

About 300 people gathered to celebrate yesterday. But beating a steady drum of objection using their cardboard signs and, at one point, a hubcap, about 15 people protested, occasionally shouting, "What about the children?" They stood in a line, their backs to the harbor, signs hoisted: "No Wyndham, No Casino Gambling, Wyndham tax rape."

The Wyndham and a proposed Grand Hyatt that would be connected to the Convention Center are expected to involve nearly $85 million in public subsidies. The 850-room Grand Hyatt would open in 2001.

A third developer, Harvey Schulweis of New York, has pledged to build a third downtown hotel, a 600-room Westin, without any public money. It would open in the fall of 2000.

"This is the beginning of Baltimore's ascension in the convention market," said Carroll Armstrong, president and chief executive officer of the Baltimore Area Convention and Visitors Association. "This, along with several other planned hotels, is the beginning of a hotel package that will support the Convention Center."

Wyndham officials say the hotel will move Baltimore into the first tier of cities for conventions, with New York, Chicago, San Francisco, Las Vegas and Orlando, Fla.

They are not deterred by the other hotel proposals.

"If another hotel such as a Ritz Carlton or a Four Seasons comes in, they're just adding to the sellable equation," said Paul A. Scott, regional director of operations for Wyndham. "The competition here is good competition. We need those rooms to be able to compete in the tier we're talking about."

The Baltimore Wyndham will be one of the chain's premier hotels, one of its seven convention hotels in places including Philadelphia, Orlando and the San Juan, Puerto Rico, vicinity. It will provide a prime East Coast site that Wyndham officials plan to work into a rotation for large conventions.

The Wyndham is expected to employ about 750, pay $16 million a year in salaries and wages and spend an equal amount on goods and services in the area. It projects $30 million to $35 million in annual revenue and expects guests to spend an equal amount at other area restaurants and attractions.

Returns for city

The city will get 10 percent of any return the hotel generates once the investors have received 15 percent. A similar arrangement with the Hyatt on Light Street generates about $2 million a year.

Baltimore sells out of hotel rooms at least 100 nights a year, about twice as often as some cities. Yet hoteliers and others remain concerned about the impact of so many rooms coming into the market. Some have speculated that the hotels that now exist could close if there are suddenly 600 more rooms than are recommended by a report commissioned in 1996.

Concerns about overbuilding

"If all three hotels came on line within a year of each other, it would take three to five years before the occupancy rates are back up," Mary Jo McCulloch, president of the Maryland Hotel and Motel Association, said yesterday. "There's always a concern in the hotel industry that you're going to be overbuilding. We saw that in the '80s, but we recovered, and occupancy rates are back up."

Wyndham officials point to a 1,000-room Marriott built near Philadelphia's convention center about six years ago.

Within a couple of years, that hotel had helped boost the occupancy rate across the city by 10 percent, said Patrick Lupsha, senior vice president of operations for Wyndham Hotels & Resorts. He predicted similar success for Baltimore.

"They had their salespeople out talking the city up," he said. "All the other hotels revitalized in order to compete."

Wyndham officials are expecting an occupancy rate ranging from 69 percent to more than 70 percent the first year. They expect 60 percent of their business to be group-related. Rooms will cost about $135 a night.

Late next year, Baltimore will be on the cover of a Wyndham hotel brochure.

Pub Date: 6/19/98

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