Officials to market Baltimore

Tax breaks for hotels seen as `tool' to spur convention business

`It's show time'

City promoters stress headquarters hotel near center is needed

Travel industry

April 25, 1999|By June Arney | June Arney,SUN STAFF

With the passage this month of legislation allowing lucrative tax breaks for downtown hotel developers, city convention officials are set to begin selling Baltimore in earnest.

The Baltimore Area Convention and Visitors Association plans to pitch the 750-room Wyndham International Hotel, now under construction on the east side of the Inner Harbor, as an enticement to meeting planners worried about Baltimore's inventory of hotel rooms. And convention officials are optimistic that the legislation will spur an announcement on a Westin hotel on Pratt Street in the Inner Harbor soon.

"It's show time," said Carroll R. Armstrong, BACVA president and chief executive officer. "I'm very jubilant. It means that Baltimore now has a tool that will allow us to be competitive in relation to other major cities in terms of new development."

But convention officials and meeting planners caution that it is still unclear how much the marketing will help without a headquarters hotel adjacent to the convention center.

Even with the convention center's 1996 expansion -- at $151 million one of the costliest publicly financed projects ever in Baltimore -- it is losing out on the large bookings. Officials say the city's lack of hotels is keeping the center, with its 300,000 square feet of exhibit space, from reaching its potential.

As bookings -- measured by the number of hotel room nights required -- for big conventions drop off precipitously, local officials scramble for smaller meetings to help pay the bills.

In an industry that typically books five years in advance, and with conventions moving around the country, missing out can mean a decade wait for another chance to win that convention's business.

The dip in bookings in the next few years concerns Baltimore hoteliers, according to Mary Jo McCulloch, president of the Maryland Hotel and Motel Association.

"They're very concerned about the decline," she said. "One of the things I've always been concerned about is the comparison year to year and whether we're really growing with the convention center expansion. When you're looking at 94,000 room nights in 2003, and you've got another 2,000 hotel rooms coming on line, then ouch."

Convention officials estimate that the shortage of rooms and lack of a headquarters hotel have cost Baltimore $316 million since November 1996.

Those losses, BACVA officials said, represent groups that booked and canceled or tentatively booked and backed out -- to the tune of 404,442 room nights. What the numbers don't reflect are the meeting planners who won't even consider Baltimore until additional hotels are in place.

"We have been on hold," Armstrong said.

But the landscape is slated to change dramatically within the next three years. Real estate developers have announced plans to build nine hotels, including the Wyndham, adding more than 3,400 rooms -- more than a 70 percent increase. At least some of them would be eligible to take advantage of PILOT tax breaks.

Under a PILOT, or payment-in-lieu-of-taxes agreement, developers could forgo up to 95 percent of their real estate taxes for up to two years. They must still pay 5 percent of their property taxes, a major increase from the $1-a-year deals under some old PILOT agreements. But the Wyndham, a project of John Paterakis Sr., was grandfathered.

The biggest of the other proposed projects are a $175 million Grand Hyatt with 850 rooms to adjoin the convention center, and a 600-room, $124 million Westin at 300 E. Pratt St.

Others are a 267-room Embassy Suites at One Light Street; a 125-room Residence Inn by Marriott at Light and Redwood; a 250-room Ritz-Carlton on Key Highway; a 278-room hotel planned as part of a $90 million, mixed-use project at the Baltimore City Community College campus at Pratt Street and Market Place; a 207-room Courtyard by Marriott on Fleet Street; and a 156-room Comfort Suites near Johns Hopkins Hospital.

Until a couple of the largest of those projects become reality, Laurel A. Barnes, a meeting planner with Healthcare Financial Management Association, based in Westchester, Ill., won't consider Baltimore for anything but small meetings.

"Because we need 1,800 peak nights [the maximum number of rooms needed at any one time], and because of the caliber of rooms, we're not considering Baltimore at this time," said Barnes, whose group books annual conventions in such cities as Anaheim, Calif.; Orlando, Fla.; Seattle; New Orleans; and Nashville, Tenn.

What would it take for her to think about Baltimore as a destination for the annual convention of 3,000 accountants and chief financial officers in the health care industry?

"We'd have to look to see, do we have two hotels linked to the convention center or right next door?" she said. "Most meeting planners are going to wait for the Grand Hyatt because of the connection to the convention center and the amount of rooms."

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