A convention headquarters hotel proposed for Baltimore could put the city in the running for convention business previously out of reach, but the addition of 750 hotel rooms to the city's lodging supply also would likely squeeze existing downtown hotels, at least initially, experts said yesterday.
The proposed Hilton, if built, could later be expanded to 1,000 or more rooms if demand warranted.
"In the short term, there's going to be probably some cannibalization on existing hotels," said Chekitan S. Dev, an associate professor of marketing in the School of Hotel Administration at Cornell University.
"But in the long term, hopefully, what the convention center and the convention center hotel will do is bring more people to Baltimore. Hopefully, it will fill the Hilton and overflow. Sometimes it works and sometimes it doesn't. It depends on how well it's done," Dev said.
Although Baltimore Development Corp. officials say they have studies that justify the additional hotel rooms, they are not making that data public.
"We've been continually reassured in the wake of 9/11 that there is room in the Baltimore market for additional rooms," M.J. "Jay" Brodie, president of the BDC, said yesterday.
"We'll have to take a very close look at this," said Robert L. Johnson, founder and chairman of Black Entertainment Television, who along with Quadrangle Development Corp. of Washington has proposed the Hilton project.
"At the end of the day, I'm confident that Baltimore will be able to support this-size project," Johnson said.
In 1996, a study by Legg Mason Realty Group, commissioned by then-Mayor Kurt L. Schmoke, said 1,000 more hotel rooms were optimal for the city. Since then, the 750-room Baltimore Marriott Waterfront and the 250-room Courtyard by Marriott-Inner Harbor have opened.
There is evidence that Baltimore has absorbed both, according to Duane Vinson, an analyst with Smith Travel Research in Tennessee.
He noted a 3.7 percent year-to-date increase in demand in 37 Baltimore hotels through September along with a 1.8 percent increase in supply. Those hotels include 7,413 rooms, he said.
"Anytime demand is outpacing supply, you've got a market that's receptive to new construction," Vinson said. "You guys have done a good job of absorbing that new supply with the new Marriott. Will you do a good job with this new hotel? Probably, given your track record."
Still, the proposed hotel has some questioning whether Baltimore can handle that many more rooms. Also in the pipeline is a 176-room Marriott Residence Inn to be built at Light and Redwood streets and a 171-room Hampton Inn and Suites planned for Redwood and Calvert streets.
"In Baltimore, that's an awful lot of rooms to fill," said William T. Walsh, general manager of the Baltimore Marriott Waterfront. "There are many cities that have built convention center hotels next to their convention centers and it has not necessarily done what they thought it would do. Philadelphia is a good example."
Benefit from overflow
Walsh said that because his hotel relies more on meetings held at the hotel rather than bookings from the Baltimore Area Convention and Visitors Association, it probably would not be affected as much as some other downtown hotels.
"The other hotels may feel the repercussions of having more rooms more than we would," he said. "On the one hand, I could see where some hotels could benefit from the overflow. I've got to wonder what it would do to the hotels on the periphery."
Many industry experts agree that a convention center hotel, sometimes called a headquarters hotel, is almost a prerequisite for meeting planners these days. They typically contain about 1,000 rooms.
For years, Carroll R. Armstrong, president and chief executive of BACVA, has said a headquarters hotel was essential for the expanded convention center to live up to its potential.
"One of the things that was sorely missing in our package was a major convention center hotel in close proximity to the convention center," Armstrong said. "Without it, you're not even in the game."
The proposed Hilton, Armstrong said yesterday, will "level the playing field," though he said the hotel, by itself, is not the answer.
"A convention center hotel is not the end-all, the savior. People need to understand that," he said.
"It just puts us on a level playing field. This gives us the ability to have 4,000 committable rooms within a mile radius of the convention center."
But assuming BACVA salespeople are successful in winning sales, it should pay off, he said.
"If the hotel could be done in 2005, I think from 2005 to 2010 would show a major difference in bookings," Armstrong said.
Doubts about growth
But the experts warn that the meetings industry is not growing drasically.
In fact, the convention industry has been essentially flat in recent years, said Heywood T. Sanders, chairman of the department of public administration at the University of Texas in San Antonio and an expert on the convention industry who has studied the Baltimore market.
"The only way that Baltimore will grow, or Washington or Boston or Fort Worth, is by taking events that are somewhere else," he said.
Additional space, in the form of Baltimore's $151 million convention center expansion, was supposed to be the key to attracting more conventions to the city, Sanders said.
"In the Baltimore case, that hasn't worked," he said.
"There's been more space but there weren't more events. And by the time you get [the convention center hotel], pretty much everyone else will have one, too," Sanders said.