In terms of cash flow, the 757-room hotel on Pratt Street ended 2010 "slightly above break-even," with $9.7 million on hand at the end of the year, compared with $8.4 million at the beginning, according to a financial statement provided this month to the city's Board of Estimates.
On paper, the hotel showed a loss of $11.08 million, with depreciation of the building, furnishings and equipment and amortization of bond issuance costs accounting for $9.02 million of that figure, according to the statement. Other reasons for the paper loss, officials say, included marketing expenses and costs of booking meetings that will be held after 2010.
The audited financial statement and a supplementary cash flow schedule for 2010 by Clifton Gunderson of Timonium show that the $301 million hotel earned enough to cover the debt service on bonds sold to pay for its construction and that the city has not had to dip into any reserve funds to address shortfalls.
The bottom line, officials say, is that the Hilton is beginning to fulfill the city's goals of serving as Baltimore's convention headquarters hotel, helping to attract large meetings that need more than one hotel, and providing jobs for residents — without jeopardizing the city's operating budget.
They also say they expect bookings and revenues to increase in 2011, based on operations so far and projections for the rest of the year.
The hotel opened in August of 2008.
"From day one, on a cash basis, we have generated sufficient revenue to pay all of our bills and pay all of the debt service," Van Sant said. "And on an accrual accounting basis, the loss keeps narrowing. We have used only proceeds from the original $301 million hotel bonds and net cash flow from operations … We have not drawn on any of the city hotel occupancy tax pledges or bond reserves. That is good news as far as the bond market is concerned."
The Hilton was one of the most expensive projects the city had ever undertaken when construction began in 2006. Some politicians voiced concern about building such a costly project and warned that Baltimore would have to cover any budgetary shortfall if the hotel didn't make enough money to meet expenses.
Van Sant said May was a strong month for the Hilton, when it had an occupancy rate of 73.9 percent. She said June and July are also expected to be strong months in 2011 in terms of group business.
Despite the continued improvement in revenues and bookings, Van Sant said, the real turning point in the hotel's performance won't come until the general economy and the city's convention business improve. She said she can't project when that will be.
Among other key findings:
•The hotel booked 172,610 room nights in 2010, up from 153,404 in 2009. Hilton projects that 182,458 room nights will be booked in 2011.
• The occupancy rate was 62.47 percent in 2010, up from 55.5 percent in 2009 and 36.9 percent in 2008, when the hotel was open for only 132 days. Hilton expects to end 2011 with an occupancy rate of 66.03 percent.
•Sixty-one percent of the hotel's business in 2010 was group business, including conventions and meetings. The rest came from leisure and business travelers, tourists and others. The breakdown for 2009 was 56 percent group business and 44 percent from other kinds of travelers.
•The hotel and its garage had the equivalent of 481 full-time employees as of March 31, 2011, up from 450 on June 30, 2010, and 413 on Dec. 31, 2009. Three hundred and sixty employees on the March payroll, or 75 percent, were city residents.