Convention center deficit may double

Legislative report puts 2003-2004 loss at $10.3 million

Economic slump blamed

Hall has failed to attract bigger conventions it was designed for

February 12, 2003|By June Arney and Bill Atkinson | June Arney and Bill Atkinson,SUN STAFF

Reflecting a sharp falloff in business, the Baltimore Convention Center's operating deficit will more than double this year and grow again in fiscal 2004, bringing the two-year loss to $10.3 million, a legislative report disclosed yesterday.

According to the report by the Department of Legislative Services, the deficit will grow from $2.4 million to nearly $5 million in fiscal 2003, which ends June 30. In 2004, the gap is expected to widen again, to $5.3 million.

Revenue this fiscal year is projected to be $10.6 million, down 4 percent from the prior fiscal year, and $9.9 million in fiscal 2004, a 6.3 percent slide. At the same time, costs are anticipated to grow at a 6.4 percent annualized rate.

The estimates were contained in a report on the budget of the Maryland Stadium Authority, which is responsible for two-thirds of the convention center's operating losses. The city is responsible for the other third.

The estimates show the Maryland Stadium Authority is facing a $3 million shortfall from the center. The authority, which oversaw the convention center's $151 million expansion, had set aside $3.8 million, but if the estimates bear out, its share will total $6.8 million for the two years.

The report was presented yesterday to members of the House Subcommittee on Education and Economic Development.

Peggy Daidakis, executive director of the convention center, said in an interview that she was not familiar with the legislative report.

But, she said, "This is the first time in 20 years that we may be falling short in our revenue projection. I think we've done pretty well. ... I'm unhappy that we're not meeting the goals set out."

The pattern of declining revenue is a familiar one across the country given the economy and competition in the industry, she said.

"There's only so much business out there, and we're all going after it," Daidakis said.

Richard W. Slosson, executive director of the Maryland Stadium Authority, who testified at the hearing, said in an interview that the convention center lost 33 large conventions this year and replaced them with more than 100 smaller meetings.

"They are not bringing in the kind of revenue that bigger conventions do," Slosson said after the hearing. "That really is where the issue is."

The Stadium Authority does not manage the convention center, he added.

Created to drive convention business and boost economic impact, the convention center was never expected to make a profit or break even. Its measures of success are attendance and the money that conventioneers pump into the region.

But its operating deficit, which has fallen steadily since the 1999 fiscal year, was not expected to balloon.

The bleak outlook for Baltimore's convention center comes as the Baltimore Area Convention and Visitors Association - the marketing agency charged with attracting conventions and tourists to Baltimore - is struggling to increase its hotel bookings.

Halfway through its fiscal year, the association is sharply behind last year's booking pace and had met just 18 percent of its hotel booking goal, according to recent internal sales figures obtained by The Sun.

The convention association was the target of a stinging outside review, which has never been made public. It was completed shortly before Carroll R. Armstrong resigned as the association's president and chief executive Feb. 1.

Daidakis said the recent turmoil at the association may have contributed to the downturn.

"Obviously the BACVA stuff just pollutes it even more," she said. "I don't know how much of a role BACVA's issues are placing on us. I'm sure they are some. I can't say they haven't been distracted lately."

During yesterday's hearing, Montgomery County Del. Richard S. Madaleno Jr. asked if state financing for the convention center should be held up pending the public release of the report.

"These are discussions about public investment," Madaleno said in an interview. "I'm suggesting in this case the money ... that we provide for the convention center be made contingent upon the receipt of the report."

The review of the Baltimore Area Convention and Visitors Association came after The Sun reported in June that the convention center had failed to live up to projections of a feasibility study.

The articles reported that instead of the 50 conventions a year projected by a 1993 feasibility study of the convention center expansion, the convention center has attracted a high of 41 conventions and a low of 26.

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