Hotel frenzy cools a bit Progress slows on each of 3 downtown projects

Lodging

October 28, 1998|By June Arney | June Arney,SUN STAFF

As year's end approaches, what was shaping up to be a downtown Baltimore landscape dotted with hotel construction sites will be quieter than expected.

Progress on each of the city's three proposed large downtown hotels -- the Grand Hyatt, the Wyndham and the Westin -- once slated for completion by 2002, has slowed.

A ceremonial groundbreaking was held in June for the controversial 31-story Wyndham Inner Harbor East Hotel, but little has happened since.

"Due to unfortunate circumstances beyond the control of Patriot American, completing the financing for the project has taken longer than expected and construction is now expected to begin by year end," according to a statement released yesterday by Patriot American Hospitality Inc., which will own the property once it is completed.

"While this delay was unexpected, we are still very optimistic about, and committed to, our entree into the Baltimore market."

Despite this delay and several lawsuits filed in connection with that $134 million project led by Baltimore businessman John Paterakis Sr., the hotel remains on target for completion in autumn 2000, according to Patriot American.

But the Grand Hyatt may not do as well at staying on schedule for completion -- that project has sought two extensions in its exclusive negotiating privilege.

Mayor Kurt L. Schmoke has said that Baltimore lawyer Peter G. Angelos, who is behind the project, was trying to negotiate a deal between the existing Hyatt Hotel at Light and Conway streets and the Grand Hyatt that could unite control of the two, resulting in more than 1,000 rooms under one management group. Developers have said they hoped to be able to make that deal final by November.

Angelos and his spokesman, Thomas N. Marudas, did not return phone calls yesterday.

About 29 percent of the $150 million Grand Hyatt project would be publicly subsidized. Angelos wants the city to donate the site, which is assessed at $10 million.

He also wants a 20-year waiver on an estimated $17 million in taxes, and wants the city to use its credit rating to win favorable borrowing rates for $16 million in revenue bonds to finance parking facilities.

That 850-room hotel, which would be adjacent to the Baltimore Convention Center, was slated to be done in 2001. But Frederick Gates, vice president of PKF Consulting in Alexandria, Va., who worked on the original feasibility study and has done work for the project since, said he does not think the Grand Hyatt can be completed before mid-2002.

"There's no firm agreement," he said. "Negotiations have been slow. Both sides want to develop it, but both parties are trying to make the deal as attractive for themselves as possible."

The $124 million Westin, planned for the former News American site at 300 E. Pratt St., had been scheduled for groundbreaking in November and for completion in 2000. But published reports say that work has been put off through the end of the year. It is unclear how that might alter the completion date.

New York developer Harvey Schulweis, who is behind the 600-room project, could not be reached for comment yesterday. That project is being built with no public money.

Schulweis is working with ING US Realty Corp., a subsidiary of ING Group. ING Group is one of the largest financial services corporations in the world, with assets in excess of $400 billion and a real estate portfolio of approximately $10 billion.

If all three projects are completed as proposed, the city would have an additional 2,200 rooms downtown, an increase of about 50 percent from the current 4,479. A 1996 Legg Mason Realty Group feasibility study commissioned by the mayor said 1,000 new rooms was optimal for the Baltimore market.

"I don't think you would have seen three hotels developed at the same time," said Gates, the PKF consultant. "It would have supplied a tremendous oversupply of rooms at one time and it would have hurt everyone."

Gates said he is surprised that at least one of the hotels has not moved forward faster, since the demand for hotels in Baltimore could readily support development of an additional hotel. But the multiple projects have probably slowed progress for all, he said.

"If any one of the three had been developing his hotel with no one else involved, I think you would have seen a lot more progress," he said. "But the others muddy the waters."

Not an insignificant factor in any of these deals is what some experts characterize as the drying up of capital markets.

"Deals are being looked at more closely now," Gates said. "Everyone wants to avoid the overbuilding that happened in the '80s."

Pub Date: 10/28/98

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