In 2005, the Baltimore Development Corp. painted a rosy picture of how a new tax-financed hotel would cement Charm City as a convention destination.
It prognosticated that without a new hotel, “it will be harder and harder to attract conventions here, and at some point, the decline in convention bookings and the perception that Baltimore is not a convention destination will bevirtually impossible to erase,” M.J. “Jay” Brodie, the president of the BDC, and Irene Van Sant, the project analysis director, wrote in the group?s summer 2005 newsletter.
Fast-forward to 2007. Brodie and Van Sant?s predictions have come true ? except city residents could end up on the hook for a new 757-room, $300-million hotel.
Numbers released earlier this month by the Baltimore Area Convention and Visitors Association show that only nine large convention groups are booked for 2010, down from 24 in 2004.
Since groups book five to 10 years in advance, these numbers reflect a major downturn. Fewer bookings mean fewer nights spent in hotels ? and far less in the occupancy tax receipts promised to service the debt ? just as the new Hilton convention hotel is scheduled to open in 2008. The number of room nights for those large conventions is estimated to drop 185 percent from 2004 to 2010.
The fact that Brodie still holds his job is amazing after the boondoggle he helped to create. But the blame can be generously spread around to include the new mayor and governor and city council president. Quite the leadership team.
It?s not as if no one knew the risks. In the midst of the hotel debate, the well-respected nonprofit Brookings Institution published a comprehensive report on convention economics in January 2005 showing that just as the market for conventions was declining, the amount of space and public capital spending for convention projects was skyrocketing.
That combination then as now is a recipe for a glut of space and hotel rooms ? certainly not evidence bolstering the need for a new hotel. Besides, if the market looked so promising, why didn?t Hilton self-finance?
It remains to be seen whether revenue from the new hotel will fully finance the debt service on the bonds used to pay for it, much less its operating expenses and property taxes ? considered a “conservative” estimate by Brodie, et al two years ago. If it doesn?t, guess who ultimately gets to pay for their folly? Taxpayers.
Since a more accurate economic impact analysis might have prevented the hotel project from gaining traction, the city must demand better studies. One way to do this would be to ask a team of local economists from our esteemed universities to vet the companies providing economic impact statements by analyzing how often reality matched their predictions.
Right now the city, BDC and BACVA must get innovative and hustle up more business ? at no additional direct or indirect taxpayer expense ? to fill those rooms, or else. The rest of us have to work harder with less for less to produce more. Why shouldn?t those in public ventures?
They have to push their thinking outside conventional convention ruts and book more, smaller events. If they can?t let them pay the multi-million-dollar difference out of their own pockets.
Until they fill those rooms, Mayor Sheila Dixon should offer every city resident a “free” weekend getaway at the new Hilton as a thank-you for our generosity. There certainly seems to be vacancy.
