Baltimore's city-owned convention hotel opened to much fanfare and high expectations last August, with white-gloved waiters serving champagne in the blue-and-rust lobby, a jazz ensemble playing and the first guests marveling at the ballpark views. Tourism and government leaders praised the $301 million, publicly financed project as the much-needed ingredient to bolster convention business and elevate the city as a destination.
But within months, the bottom fell out of the economy, weakening demand in the lodging and convention industries.
Faced with the worst economy in decades as it completes its first year, the Hilton Baltimore Convention Center Hotel has failed to live up to rosy predictions made in more robust times. The 757-room hotel, a block north of Camden Yards, has fallen short in a key measure of a hotel's performance - revenue earned per room. And city officials are less certain the hotel will turn a profit in the three- to five-year time frame originally projected.
Despite the struggling lodging and convention industry, the West Pratt Street hotel has succeeded in meeting other goals, city officials say. It has persuaded convention groups that would have gone elsewhere to come to Baltimore. And it has paid its bills and met its debt payments without dipping into reserves.
"We wanted to pay our bills without having to go outside what the hotel brings in," said Irene Van Sant, hotel project manager for Baltimore Development Corp., the city's economic development arm.
During the first annual reporting period, which ended Dec. 31, 2008, and includes only 132 days of operation, the hotel reported a $17.1 million loss, with $18.1 million in revenue and $35 million in expenses, according to financial statements prepared by Clifton Gunderson LLP. Van Sant notes that much of the expenses were funded not with revenue but with bond proceeds designed to cover one-time opening costs, which must be charged as expenses under accounting rules.
But the hotel falls short in revenue per available room, which is average daily room rate multiplied by occupancy rate. City and hotel officials won't disclose the Hilton's revenue per room, occupancy or average room rates. But a calculation using the hotel's reported room revenue of $6.8 million for 2008 and the number of days open last year shows revenue per available room of $68.46. That's well below the $112.57 projected for the Hilton for 2008 by consultants, based on projected occupancy levels of 62 percent and an average rate of $181.56. It's also below Baltimore's average hotel revenue per available room of $82.55 as of midyear, according to Smith Travel Research.
