Eight is enough.
Once the name of a television show, it could also be Baltimore's unofficial slogan for new hotels downtown.
Within the next three years, real estate developers plan to build eight hotels in the city, projects that would add nearly 3,300 rooms to the city's inventory, a more than 70 percent increase.
The new hotels may also have a negative effect on the percentage of occupied rooms. If all the lodging projects are completed and demand stays relatively constant, the percentage would drop by one-quarter.
"Clearly, Baltimore can handle significantly more hotel rooms now and in the future," said Michael Mahoney, director of hospitality and leisure consulting for PricewaterhouseCoopers, a leading accounting and advisory firm. "But is that number 2,000 more rooms or 3,000 more rooms? That's hard to say."
A Legg Mason Inc. study commissioned by the city four years ago said Baltimore could absorb 1,000 new full-service, convention-style hotel rooms downtown, and another 300 suites-style rooms.
Adding as many as 3,300 rooms could be most devastating to the region's existing hotels, especially those in the suburbs that get spill-over convention business, analysts and industry participants predict. But the rapid expansion could hurt the downtown hotels, too.
"The market here isn't mature enough for eight new hotels," said Christian Mari, general manager of the 622-room Renaissance Harborplace Hotel, downtown's second-largest lodger. "The question is, what are we mature enough for? We won't know that until after they are built."
In addition to affecting occupancy levels, the new rooms will likely drive down profitability at existing downtown hotels, where occupancy hovers around 75 percent. Hotels generally make money when they achieve occupancy of 60 percent, although smaller hotels can often get in the black when half its rooms are occupied on average.
Maybe a better slogan would be: Eight is too many.
Don't tell that to the proposed hotels' developers. They all believe their projects are assured success because of their superior location, high quality or ability to fill a niche.
Take Peter G. Angelos, for instance. The attorney behind the proposed $175 million Grand Hyatt Hotel being pitched for a site on Howard Street, directly across from the Baltimore Convention Center, contends that not only will his 850-room project not compete with planned or existing hotels, it will enhance them.
"I would think everyone would benefit from having a high-quality, true convention center hotel downtown," Angelos said, upon locking up financing for his 22-story project next to Oriole Park at Camden Yards.
Joe Clarke shares Angelos' view about competition when it comes to his 267-room Embassy Suites project, planned as part of a 35-story skyscraper on Light Street.
"It's not a threat at all," Clarke said, in response to a question about a 125-room Residence Inn that Marriott hotel developers may build directly across the street from him. "It won't be any competition -- it's a totally different product type."
The luxury Ritz-Carlton supposedly won't compete with the extended-stay Residence Inn by Marriott in the same way the upscale Westin Hotel won't compete with the business-oriented Embassy Suites, in the same way the tourist-directed and city-supported Wyndham International won't compete with the family-oriented hotel planned for the Baltimore City Community College (BCCC), in the same way the Grand Hyatt won't compete with the mid-priced Comfort Suites near Johns Hopkins Hospital.
"My hotel is in a niche that no one else has proposed," said Neil Fisher, the Florida developer behind the plan to construct a Ritz-Carlton south of the Inner Harbor. "The only competition I will have is from the Harbor Court Hotel, and I think there is enough of a demand in that pinnacle market for us both."
"We don't build high-end properties like some others, and our projects aren't big enough to get us into trouble," said Sam Switzenbaum, president of Switzenbaum Realty Co., the developer proposing a 278-room hotel as part of a $90 million, mixed-use project at BCCC. "We'll get a greater share of the tourist market because of where we are on Pratt Street, and we'll get our share of business travelers, too. I'm not concerned at all about the other projects."
But aren't they all hotel rooms?
Yes, but . not really.
Like much of America in the latter half of the 20th century, customers tend to pick hotels based on brands and quality type. Typically, hospitality patrons stay in hotels they know, and in the best place they can afford, according to industry experts.
Increased demand plays the biggest role in hotel success, though, and analysts hope that the expanded convention center, combined with tourist attractions like Port Discovery children's museum and restaurants such as ESPN Zone, Planet Hollywood and Hard Rock Cafe will boost demand year-round.
A hotel's location also has an impact, as does the type of stay. A convention planner coming into town to coordinate a meeting two weeks before it occurs will likely stay in an extended-stay or suites hotel rather than the Ritz-Carlton.
Using that formula, only three of the proposed hotels -- the Wyndham International, Grand Hyatt and Westin Hotel -- really compete against each other, analysts say. And two of those, the Wyndham and the Grand Hyatt, would be a mile apart, allowing each more than enough elbow room, industry observers say.
The Westin and the Wyndham, the only hotel under construction, also have a leg up in that they have received upward of $50 million in public subsidies, allowing them to cut room rates to compete more effectively.
"Many of the eight could get built because they represent niche entries into the market," said Joseph M. Cronyn, a senior associate at regional appraisal and real estate consulting firm Lipman, Frizzell & Mitchell and a former Legg Mason Realty Group Inc. vice president. "But it's a multidimensional puzzle."
"The greatest problem will come with the three largest projects, which need a lot more capital to get built and to operate," Cronyn added. "If all three of those get built, it will take two or three years to absorb them, or longer."
Niches aside, few analysts believe that all eight hotels will be built, even if increased bookings at the convention center cause a surge in room demand.
The tallest hurdles will be in maintaining growth in demand and in obtaining financing. The more new hotels that get built, the harder the financing will be to come by for ones still on the drawing board, Cronyn and others said.
Other pressures could also prevent all eight from reaching fruition. Last week, for instance, Ritz-Carlton developer Fisher said he was close to withdrawing the project from consideration, after South Baltimore residents objected to his plan to build two hotel towers that would partially block waterfront views from Federal Hill.
"The bottom line is it's unlikely that all the hotels being proposed will get built, because of financing and market constraints," said Rob Koger, president of Molinaro-Koger, a Virginia hotel brokerage and consulting firm.