In the short term, the new Baltimore Hilton likely will cut into the business of the city's other downtown hotels and cause occupancy and rates to drop, Petrik said.
"But the fact remains that the city and the state put money into the expanded convention center, and you do not have enough rooms in town to fully utilize the center," he said. "In order to book the convention center, you've got to have the hotel rooms first. In the long term, it should increase lodging demand in the city because the city will be able to handle large groups."
The downtown area, which has 44 hotels and 8,000 hotel rooms, has seen its occupancy rates drop this year. According to Smith Travel Research, occupancy rates fell by 4.6 percent to 62.5 percent for the first half of the year, compared with the first six months of 2007. About 2,400 hotel rooms at the Hilton and other hotels are under construction or have recently opened.
Last month, Baltimore convention officials said the new Hilton helped the city to book a record number of hotel room nights for future years. The Baltimore Area Convention and Visitors Association said it had booked 451,608 room nights in city hotels through 2017 during the fiscal year that ended June 30 - an 18 percent jump over where bookings stood last year.
While hotel rates will vary, costs in September range from $319 to $379 a night, according to Hilton's Web site. Hotel officials would not discuss the rates, saying they will vary according to market demand.
Among future bookings is the Conference of Mayors in June 2011, a five-day event that will bring 800 people to Baltimore - 600 of whom will stay at the Hilton. Cities where the event was held in the previous four years include Los Angeles, Las Vegas, Chicago and Boston.
Such plans have left city officials feeling confident about their investment, they said yesterday.
The city sold $301.7 million worth of revenue bonds in January 2006 to finance the hotel. The hotel's net operating income will be used to pay the debt service on the bonds. In case of a shortfall of projected hotel revenue, the city is pledging $7 million in annual city hotel occupancy tax receipts as a backup.
Many in the community and on the City Council were critical of plans for the city to build and own the hotel, Baltimore's most expensive public project to date. They argued that the city should be able to find a private developer, even if it meant offering tax incentives, and that other cities' convention headquarters hotels had failed to meet expectations and drive convention business.
