Amtrak wants to build a hotel at Baltimore?s Penn Station. We join you as taxpayers in wishing that its executives demonstrate consistently that they know how to run a railroad first.
The U.S. Government Accountability Office (GAO) estimates Amtrak will lose more than $1 billion this year.
Not once in its 34-year history has it turned a profit.
It is not that we don?t think Penn Station could use a serious upgrade; it could. But it should be done by those with a proven track record developing hotels and retail outlets. So far, Amtrak won?t say who would potentially build and manage the proposed 72-room property.
This is a company practiced at handing out no-bid contracts and giving bonuses for poor performance ? as the 2005 GAO report on Amtrak shows. Amtrak has not been adept at building new businesses, much less managing its rail service. Recent, much smaller attempts at innovation point to the rail service management?s incompetence.
In November, for example, Amtrak debuted a partnership with Subway restaurants on its Empire service, which runs between Albany and New York City. Amtrak?s ousted former president, David Gunn, had supported partnering with Subway to provide its popular sandwiches to customers and make money. It was a good idea.
But it lasted all of a week because of rail union pressure against Subway?s nonunion employees.
Amtrak building and managing its own hotel would be a big mistake.
It would represent a reversal of the railroad?s smart policy of divesting itself of non-railroad businesses that have contributed to hefty losses.
That also would make it responsible for even more of a loss if the project fails.
However, if Amtrak chooses to lease space to a developer, the project could be more than viable. Let Washington?s Union Station serve as a guide.
The redeveloped station is one of the most visited tourist spots in the city. It is home to about 120 shops, restaurants and a food court that generate $130 million annually.
Amtrak, which is headquartered in Union Station, does not own the entire station. It does in Baltimore, which would allow it to collect rent for any space it chose to lease.
Redeveloping Penn Station here along those lines could benefit the 918,624 passengers who pass through the station each year, the rail company, nearby residents and visitors.
Visitors would gain a lodging option. And passengers and locals would gain more food options ? now practically nonexistent. Amtrak would earn rent.
Signs point to the fact that stations could attract more than just passengers if redevelopment plans for surrounding neighborhoods take off.
Surrounding neighborhoods are included in the Station North Arts and Entertainment District ? a state designation that provides tax benefits for turning the area around.
Whether a hotel will make it is not clear, but hotel developers and private investors should make the decision, not Amtrak ? with our money.
