Maryland, Baltimore expect millions from Star-Spangled Spectacular

The Baltimore Sun

The Baltimore Running Festival consistently generates about $40 million in economic impact each year, according to official estimates, and at its peak, the Grand Prix of Baltimore pumped $47 million into area hotels, restaurants and stores. Organizers of 2012's Star-Spangled Sailabration say that weeklong event poured even more money — about $166 million — into the local economy.

But city officials say this week's Star-Spangled Spectacular — which marks 200 years since troops in Baltimore beat back a British invasion and the national anthem was written — could surpass all those totals.

"It's the largest tourism event in our city's history," Visit Baltimore CEO Tom Noonan said. "A lot of hotels have sold out downtown. We know we're going to see great restaurant revenue. Our museums are going to see an uptick. Even nonprofits are seeing an uptick. This is good business for everyone."

The weeklong commemoration of the Battle of Baltimore, a turning point in the War of 1812, has drawn both President Barack Obama and Vice President Joe Biden to Charm City. State officials say more than a million people are descending on Baltimore to view tall ships, Blue Angels flyovers, the state's largest-ever fireworks show, and a concert featuring acts such as Smokey Robinson, Kenny Rogers and Melissa Etheridge.

"I compare this to a presidential inauguration," said Ed Rudzinski, general manager of the 751-room Baltimore Marriott Waterfront. "We've been sold out since August. There's no comparison to a normal weekend. It's jamming. People are celebrating Baltimore."

Still, while economists say the festivities are likely to provide a significant short-term boost to tourist-focused industries such as hotels and restaurants, they caution against hyperbole. Such events rarely bring a tangible, long-term economic benefit to a city or state, they say.

"If you have a carnival in town once, it will generate some economic activity," said Steve H. Hanke, an economics professor at Johns Hopkins University. "When the carnival leaves, that's the end of it."

And large-scale events often come with costs to taxpayers, he noted. "I'm rather skeptical of these politically promoted events. Once you add up all the costs associated with these things, the big net benefits often shrink down into something more modest."

The nonprofit the state set up to run the festival — Star-Spangled 200 — is spending $5.1 million, a combination of state tax dollars and private funds, officials said. City officials expect to spend another $2 million on increased staffing, overtime and related expenses.

Is such government investment worth it? With Baltimore's Grand Prix, some critics didn't think so. The Indycar race generated $3 million in tax revenue for Baltimore over its first two years but cost about $1.3 million in staffing and related expenses. And the city used more than $7 million in federal grants to improve roads for the race. The first year of the race ended in a financial mess, as the company running the event — Baltimore Racing Development — became mired in debt and failed to pay numerous vendors and contractors. An economic study was never performed for the race's third and final year under new management.

In contrast, the state-backed 2012 Sailabration operated with a $4.8 million budget but generated $5.7 million in tax revenue for the state. Baltimore spent about $555,000 on staffing and related costs while taking in about $1.5 million in tax revenue.

City boosters like Noonan think the Star-Spangled Spectacular's events could serve as more than just a tax generator and short-term economic boost. He thinks the positive national exposure could last in tourists' minds for months or even years.

"We could have a sustained uptick in tourism," he said. "Long term, this could create jobs."

Two years ago, an estimated 1.5 million people visited downtown Baltimore for the Sailabration, including about 435,000 visitors from out of state. This year, the research firm Forward Analytics will once again gather information to estimate attendance and spending.

Local businesses are already assessing the financial impact of the events. On Saturday afternoon, when light rain briefly delayed a Blue Angels performance, crowds still packed the Inner Harbor — though foot traffic was slightly less than some vendors had hoped for.

Ginny Holt, operations manager at Watermark, which provides harbor cruises, was seeing about a sixfold increase in business over a typical September weekend. She said the company brought several boats from Annapolis to accommodate the crowds. Even so, the rain was causing business to slip slightly from the volume of customers at Sailabration two years ago.

"We're quite busy," she said. "But we still have some open seats."

Likewise, Allen Taylor, who was managing the London Court Beverage Co.'s lemonade stand, said the event is one of the largest he's been associated with in 25 years of business.

"Obviously, this weather doesn't help," he said. "But sales have been good."

Jill Feinberg, spokeswoman for the Star-Spangled 200, said the rain has not caused any aspect of the event to be canceled.

"It's still active and lively," she said. "I still feel like it's been crowded."

The local economy is also benefiting from a confluence of crowds for Thursday night's Ravens game against the Pittsburgh Steelers, an Orioles series against the New York Yankees and the bustling new Horseshoe Casino nearby.

"The New Yorkers in town are looking around and saying, 'What's going on?'" Rudzinski said. "It's really, really a great weekend. Not only from a financial perspective, but a PR perspective. I think this is going to benefit the city for years to come."

Kerry Tan, an assistant professor of economics at Loyola University Maryland, called the week a "perfect culmination of visitors coming to town for cultural experiences."

"They're not going to stick around forever, but it should definitely be a short-term boost," he said.

Star-Spangled 200 spent about $1.4 million on Saturday's concert and TV special; $1.3 million on various smaller festivals; $730,000 on visiting ships and $450,000 on the fireworks show, among other expenses.

Many restaurants and hotels were seeing an impact from the wide-ranging festivities, which included events at Fort McHenry, the Inner Harbor and Patterson Park..

Willy Dely, hotel manager at Celie's Waterfront Inn in Fells Point and chief marketing officer for restaurants including Kooper's Tavern and Slainte Irish Pub and Restaurant, says merchants are drawing crowds.

"There are a lot of people on the streets. The bed and breakfast has been booked for five or six months," Dely said, adding that he expects a 50 percent to 75 percent spike in restaurant revenue. "It showcases our town in a better image. This is a great city for people to enjoy."

The economic boost hasn't been felt in more distant parts of Baltimore, some businesses there say.

Kathleen Lyon, who runs The Senator and Charles theaters, said, "There's been no noticeable difference [in business] one way or the other. The crowds and the tourists are more concentrated down by the water."

Christopher Summers, president of the Maryland Public Policy Institute, said he believed some Baltimore residents might leave the city to avoid the crowds and congestion, but many more will stay.

"It will be an economic shot in the arm, which is always a good thing," Summers said. He suggested that Baltimore schedule more events to cash in on historical events that happened here.

"Baltimore is a city that is so rich in history," he said. "We should play that up more often."

lbroadwater@baltsun.com

twitter.com/lukebroadwater

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad
72°