Are Hotels Open In Baltimore

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Are Hotels Open In Baltimore – Baltimore City last month transferred an additional $3.1 million to the city-owned Hilton Baltimore Inner Harbor hotel, according to a recent financial disclosure, bringing total payments since the coronavirus pandemic and the hotel and tourism industry downturn to about $16 million.

The city built a 757-room hotel at the convention center in the mid-2000s, creating a unique city-owned corporation and borrowing $300 million in bonds to finance its construction.

Are Hotels Open In Baltimore

Are Hotels Open In Baltimore

Baltimore built the 757-room Hilton Baltimore Inner Harbor Hotel in the mid-2000s, creating a city-owned corporation that borrowed $300 million in bonds to finance its construction. The hotel struggled to make a profit under the weight of its debt. After refinancing the bonds in 2017, the hotel continued to fall short of expectations but was profitable. The hotel has been hemorrhaging money since the coronavirus pandemic, prompting infusions of money from the city. September 12, 2022 (Kenneth K. Lam/Baltimore Sunday)

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The Baltimore Hilton, on West Pratt Street overlooking Oriole Park in Camden Yards, was supposed to attract more business to the convention center next door and struggled to turn a profit under the weight of its massive debt. After refinancing its bonds in 2017, the Baltimore Hilton continued to miss expectations but was profitable.

Then the coronavirus pandemic hit. The hotel has been bleeding money ever since, prompting an outflow of cash from the city of Baltimore.

Officials with the Baltimore Development Corporation, which oversees the hotel, say the Baltimore Hilton is outperforming its downtown counterparts, but acknowledged that more cash may be needed as the area’s hospitality industry continues to lag pre-pandemic levels.

The city is required to add funds if the Baltimore Hilton cannot pay its bonds. Those payments, which were more than $15 million last year, will continue until 2046, when the debt is fully repaid. By then, the hotel is expected to spend nearly half a billion dollars paying off the remaining principal and interest.

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Baltimore Development CEO Colin Tarbert said the city has made three payments totaling about $16 million so far to help pay off the hotel’s debt. While he hoped this August payment was the last, he said more payments may be needed.

Officials with the Baltimore Development Corporation, which oversees the hotel, say the Baltimore Hilton is outperforming its downtown counterparts, but acknowledged that more cash may be needed as the area’s hospitality industry continues to lag pre-pandemic levels. September 12, 2022 (Kenneth K. Lam/Baltimore Sunday)

“We don’t expect the hotel to stabilize and return to pre-Covid numbers for another two years, maybe three years,” Tarbert said. “However, in the case of the hotel, I think we’re getting to the point where we can hopefully pay the debt service.”

Are Hotels Open In Baltimore

In addition to the $16 million the city received, Tarbert said, the hotel received about $3.5 million in COVID aid during the pandemic, most of which came from the federal government. He said the Baltimore Hilton received $225,000 from a state fund that was primarily aimed at small and boutique hotels.

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“I was hoping they would be more inclined to support the [Baltimore] Hilton because the Hilton is really central to Baltimore’s tourism and convention business,” Tarbert said of the state fund.

The Baltimore Hilton has long benefited from its public ownership and funding. While private hotels pay property and lodging taxes to the city, the Baltimore Hilton siphons off millions of dollars in those taxes to pay off its debt through a mechanism called tax increment financing — commonly known as TIF bonds.

But when the hotel applied for $7 million from the federal Paycheck Protection Program, it found out it was ineligible for those funds, in part because it is technically a public entity, Tarbert said.

Built by Baltimore City in the mid-2000s, the 757-room Hilton Baltimore overlooks the Babe’s Dream statue in Oriole Park at Camden Yards. September 12, 2022 (Kenneth K. Lam/Baltimore Sunday)

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Among similar-sized hotels in Baltimore, the occupancy rate is just under 50%, and the average daily room rate was recently $168, Tarbert said. He did not provide specifics for the Baltimore Hilton, but praised the staff and management, saying the hotel surpassed those metrics after effectively being closed for a year and serving as a temporary hospital field.

In 2019, which Tarbert called the Baltimore Hilton’s best year, the hotel had an average occupancy rate of 67% and an average daily rate of $178, according to financial disclosures, but even in that “best” year, the hotel still underperformed. projections set several years earlier during the debt refinancing — and even further below the projections made when the bonds were originally issued in 2006.

When the Baltimore Hilton was designed in 2005, it was billed as the largest public works project in Baltimore history and became a lightning rod for critics. City leaders and community members spent more than 28 hours in multiple hearings that year debating whether the hotel operation would ever be able to pay off $300 million in bonds — or whether taxpayers would be left on the hook.

Are Hotels Open In Baltimore

“The construction of this convention hotel is an important step in the development of Baltimore,” said Mayor Martin O’Malley at the time.

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“It all depends on how these things work out,” Councilman James B. Kraft said of the revenue projections. “For the sake of all taxpayers, I hope these expectations are met.”

Others, like Heywood Sanders, a professor of public administration at the University of Texas at San Antonio, were more forthcoming.

“Look,” Sanders told The Sun in 2005. “I’m not relishing the role of Official Cooler. I just have a long list of places where it doesn’t work. Why will it be any different [in Baltimore]?”

On Thursday, Sanders said he has been closely following developments at the Baltimore Hilton and the nearby convention center since then. The main reason Baltimore built the hotel was to attract conventioneers downtown, Sanders said, and that just wasn’t happening — regardless of the pandemic.

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Sanders said he regularly files state public records requests to obtain attendance figures specifically for conventions and trade shows — excluding public events and meetings — at the Baltimore Convention Center.

According to Sanders, the mall had 286,087 such visitors in fiscal year 2006. That number has only been surpassed three times since the Baltimore Hilton opened, with attendance peaking at 309,622 in fiscal 2014, he said.

Convention and trade show attendance dropped to 204,166 in fiscal year 2019. Over the past decade, the convention center has lost major events, such as Otakon, a celebration of Asian pop culture that drew about 30,000 people. Baltimore, Sanders noted.

Are Hotels Open In Baltimore

“There are relatively few magic bullets in the convention center world,” Sanders said. “This is a highly competitive business in which cities across the country have invested hundreds of millions and often billions of dollars in new and expanded venues and subsidized or fully publicly funded hotels in an effort to win convention business, and often it has worked. to be awesome. worthless.”

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The city is required to add funds if the Baltimore Hilton cannot pay its bonds. Those payments, which were more than $15 million last year, will continue until 2046, when the debt is fully repaid. September 12, 2022 (Kenneth K. Lam/Baltimore Sunday)

Sanders said it is unknown if the Baltimore Hilton will eventually return to pre-pandemic bookings or revenue levels.

Earlier this year, for example, the International Conference for Theater Professionals returned to the Baltimore Convention Center, but unlike in past years, members did not stay at the Baltimore Hilton. The Baltimore Hilton filed a federal lawsuit last month against the United States Institute of Theater Technology, or USITT, alleging the organization improperly canceled a contract that was supposed to generate $637,000 for the hotel.

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The Baltimore Hilton claims in court documents that the hotel is giving USITT a room discount along with other concessions in exchange for booking an expected 2,974 room nights in late February and early March, but I don’t think that was the case. enough to entice her. organization and allegedly ordered members to stay in other hotels. The Baltimore Hilton claims USITT owes a $414,000 cancellation fee as calculated under the 2017 settlement.

USITT has not formally responded to the complaint, which was filed in August, and did not respond to a request for comment Tuesday afternoon.

Dr. Linda Loubert, associate professor of economics at Morgan State University, called the Baltimore Hilton “a very tough nut to crack.” The hotel costs the city money that could be spent on neighborhoods or schools, Loubert said, but could have an economic impact in other industries, such as restaurants and entertainment.

Are Hotels Open In Baltimore

It’s hard for Loubert to justify spending more money on the Baltimore Hilton without knowing more about the post-Covid marketing strategies and business plans for the city-owned hotel.

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