Tuesday, May 2, 2017

The City as Hotelier

Mayor Pugh equipped with a degree in business didn't need long to identify the Baltimore City owned Hilton Convention Hotel as a problem. The hotel represents the preliminary final point of a long string of the City trying to ramp up its convention business.
Convention Hotel blocks 50% of the downtown views from the stands 

The idea that the city somehow should be in the hotel business may have begun when then Mayor Schmoke declared Harbor East to be the ideal location for a convention center hotel.  With its 1.2 miles distance from the Convention Center that didn't seem an obvious choice at the time and more an assist to the late baker John Paterakis who wanted to build the hotel initially under the Wyndham nameplate. The Marriott hotel is thriving today, it is just as much a convention center hotel as any other hotel that fills up in Baltimore when once in a while a really large convention comes to town, except that it still pays no taxes a decade later. So the City subsidized the Marriott and then built its own hotel under the Hilton flag.

The Hilton writes losses year after year, which former BDC CEO Brodie once called "paper losses", implicating somehow that they don't directly dip into the City General Fund. Well, no, but a hotel that doesn't pay its hotel taxes is costing the City real money anyway. This bugged Mayor Pugh enough to agree to refinancing. Per the Brew, the Hilton reported a $5.2 million loss in its latest financial statement in 2015 – not the $7 million in profits the hotel was originally projected to have that year. The 757-room complex has lost more than $70 million since opening in 2008 funded from reserve funds and the hotel occupancy tax so the bond payments could be met. A reduction of the bond rate from 5.9% to 5.6% is expected to save the City between $3 -4 million a year, the Brew reports from a Board of Finance meeting that took place on April 24.
The Baltimore Hilton: City albatross

Money isn't the only issue with the Hilton. Neither the Hilton nor the Marriott are architectural gems, both block important views and both violate urban design concepts which, in the case of Harbor East were in in place before the hotel was built and which in the case of the Hilton should have been blatantly obvious from the success of Oriole Park. Well, the City understood  this halfway, which is why the Hilton blocks only about 50% of the view cone from the ballpark into downtown, a view that was very dear to the stadium designers and was one of the signature pieces of the much acclaimed stadium design. By contrast, the views from the hotel into the bird's nest are marvelous, in part because they have the advantage that one cannot see the hotel.

The Hilton has the connecting bridges directly into the convention center that some hotel and convention consultants find so unavoidable, although urban designers have long declared them a bad idea because they keep people off the street. A couple of blocks to the east, significant money has just been spent to demolish a"skybridge" connecting straight into the HarborPlace pavilions.  The Hilton also contains large event facilities and can easily absorb smaller conventions itself without anyone having to set foot into Baltimore's Convention Center. Is this competition or critical mass?
The Baltimore Convention Center: Underperforming

Meanwhile, convention promoters have found new reasons why the Convention Center doesn't perform as anticipated and argue for yet another expansion. (Does Baltimore need a bigger Convention Center?). In a typical negative feedback loop Baltimore can dig itself deeper and deeper into that hole of ever more hotel and convention space or it can finally recognize that this isn't a battle the City is likely to win. So far, the preference seems to be digging deeper, for example through a convention center extension via a new arena, an idea that lost some steam after its chief promoter and funder, the former CEO of Whiting Willard Turner Hackerman, died.

Keeping a large city competitive and on a healthy sustainable footing is a complex undertaking. The Hotel and the Convention Center  show that an "all of the above strategy" is not the way to manage scarce resources. It is high time the City develops a strategic approach to subsidies and expenditures that prioritizes those things that cater to the most important goals. Only a few would name trying to be a first tier convention city in a totally overcrowded national convention market a prudent priority.

Klaus Philipsen, FAIA

As co chair of the Urban Design Committee of AIA Baltimore I was involved in design discussions and suggestions for both hotels. 

See also this video: 

As Losses Mount for Taxpayer Backed Hotel, Politicians Scatter

Sun photo 
Sun article from Oct 9, 1997 about plans for the hotel that is now the Marriott

Daily Record of June 10, 2000 about the future use of the parcels that are now the Hilton Hotel

My book, Baltimore: Reinventing an Industrial Legacy City is my take on the post industrial American city and Baltimore after the unrest. 
The book is now for sale and can currently be ordered online directly from the publisher with free shipping. 

No comments:

Post a Comment