With the passage this month of legislation allowing lucrative tax breaks for downtown hotel developers, city convention officials are set to begin selling Baltimore in earnest.
The Baltimore Area Convention and Visitors Association plans to pitch the 750-room Wyndham International Hotel, now under construction on the east side of the Inner Harbor, as an enticement to meeting planners worried about Baltimore's inventory of hotel rooms. And convention officials are optimistic that the legislation will spur an announcement on a Westin hotel on Pratt Street in the Inner Harbor soon.
"It's show time," said Carroll R. Armstrong, BACVA president and chief executive officer. "I'm very jubilant. It means that Baltimore now has a tool that will allow us to be competitive in relation to other major cities in terms of new development."
But convention officials and meeting planners caution that it is still unclear how much the marketing will help without a headquarters hotel adjacent to the convention center.
Even with the convention center's 1996 expansion -- at $151 million one of the costliest publicly financed projects ever in Baltimore -- it is losing out on the large bookings. Officials say the city's lack of hotels is keeping the center, with its 300,000 square feet of exhibit space, from reaching its potential.
As bookings -- measured by the number of hotel room nights required -- for big conventions drop off precipitously, local officials scramble for smaller meetings to help pay the bills.
In an industry that typically books five years in advance, and with conventions moving around the country, missing out can mean a decade wait for another chance to win that convention's business.
The dip in bookings in the next few years concerns Baltimore hoteliers, according to Mary Jo McCulloch, president of the Maryland Hotel and Motel Association.
"They're very concerned about the decline," she said. "One of the things I've always been concerned about is the comparison year to year and whether we're really growing with the convention center expansion. When you're looking at 94,000 room nights in 2003, and you've got another 2,000 hotel rooms coming on line, then ouch."
Convention officials estimate that the shortage of rooms and lack of a headquarters hotel have cost Baltimore $316 million since November 1996.
Those losses, BACVA officials said, represent groups that booked and canceled or tentatively booked and backed out -- to the tune of 404,442 room nights. What the numbers don't reflect are the meeting planners who won't even consider Baltimore until additional hotels are in place.
"We have been on hold," Armstrong said.
But the landscape is slated to change dramatically within the next three years. Real estate developers have announced plans to build nine hotels, including the Wyndham, adding more than 3,400 rooms -- more than a 70 percent increase. At least some of them would be eligible to take advantage of PILOT tax breaks.
Under a PILOT, or payment-in-lieu-of-taxes agreement, developers could forgo up to 95 percent of their real estate taxes for up to two years. They must still pay 5 percent of their property taxes, a major increase from the $1-a-year deals under some old PILOT agreements. But the Wyndham, a project of John Paterakis Sr., was grandfathered.
The biggest of the other proposed projects are a $175 million Grand Hyatt with 850 rooms to adjoin the convention center, and a 600-room, $124 million Westin at 300 E. Pratt St.
Others are a 267-room Embassy Suites at One Light Street; a 125-room Residence Inn by Marriott at Light and Redwood; a 250-room Ritz-Carlton on Key Highway; a 278-room hotel planned as part of a $90 million, mixed-use project at the Baltimore City Community College campus at Pratt Street and Market Place; a 207-room Courtyard by Marriott on Fleet Street; and a 156-room Comfort Suites near Johns Hopkins Hospital.
Until a couple of the largest of those projects become reality, Laurel A. Barnes, a meeting planner with Healthcare Financial Management Association, based in Westchester, Ill., won't consider Baltimore for anything but small meetings.
"Because we need 1,800 peak nights [the maximum number of rooms needed at any one time], and because of the caliber of rooms, we're not considering Baltimore at this time," said Barnes, whose group books annual conventions in such cities as Anaheim, Calif.; Orlando, Fla.; Seattle; New Orleans; and Nashville, Tenn.
What would it take for her to think about Baltimore as a destination for the annual convention of 3,000 accountants and chief financial officers in the health care industry?
"We'd have to look to see, do we have two hotels linked to the convention center or right next door?" she said. "Most meeting planners are going to wait for the Grand Hyatt because of the connection to the convention center and the amount of rooms."
Even for smaller meetings booked two years ahead, Barnes said, hotels that are merely planned don't carry a lot of weight with her. "If we're booking short term, we're probably not going to take the risk on that destination if there aren't renderings and a date of completion," she said. "The risk is doing all the negotiations and finding out the hotel isn't going to happen."
In addition, competition is heating up in Baltimore's back yard. Washington is building a $625 million convention center slated to open in March 2003 with 725,000 square feet of exhibit space.
Across the country, there is a pattern of a city expanding its convention center, then having it fail to live up to booking expectations, followed by a decision to build a headquarters hotel of 800 to 1,200 rooms "to make the convention center competitive with other cities," according to Heywood T. Sanders, professor of urban studies at Trinity University in San Antonio.
It happened after Charlotte, N.C., opened a convention center projected to generate 528,000 room nights a year but which actually generated 170,000, Sanders said. "So they're building a headquarters hotel," he said. It's also happening in Houston; Sacramento, Calif.; Boston; and perhaps in Washington.
Although there is talk of growth in the $83 billion-a-year meetings industry, studies show that attendance has been essentially flat in the past five years, with a slight blip upward in 1999.
"It raises an interesting question about whether there will be business to fill up all this space," Sanders said. "If city after city is putting their money on exactly the same strategy you've got to wonder. There will be some cities that succeed, but there will also be cities that fail. There comes a point that continued large-scale public investment with the idea that this will work simply doesn't suffice anymore.
"The immediate competition for East Coast meetings between Philadelphia, Washington and Baltimore is remarkably tight," Sanders said. "But for national meetings, based on density of air service, historical amenities and volume of hotel rooms, I'd have to give the nod to Philadelphia and Washington."
Because 1999 and 2000 had been projected several years ago as lean years for conventions in Baltimore, BACVA instituted a short-term marketing plan, targeting smaller groups that don't need lengthy advance time.
Those measures helped bring bookings for fiscal 1999 (July 1, 1998, through June 30, 1999) above the same period in fiscal 1998.
As of April 6, there were 355,596 definite room nights on the books, compared with 305,802 in 1998, according to BACVA statistics. Comparing calendar years, as of March 16, 1999, there were 339,074 definite room nights booked for 1999 against 436,468 for 1998.
But for 2003, Baltimore has just 94,862 definite room nights booked. By comparison, the Philadelphia Convention Center has 277,000 convention center-related room nights booked for 2003 and 539,000 in 2002. Part of the reason for the high number in 2002 is that planners decided that the promised hotels were really going to happen, said Mike Gamble, senior vice president of sales and marketing for the Philadelphia Convention and Visitors Bureau. By next year, the city will go from 6,700 rooms to 10,000. With those additional hotel rooms, Gamble's goal for 2002 and beyond is 650,000 room nights a year.
Baltimore's convention center is not always booked with events that fill the city's hotel rooms, making optimum use of the center. "That building is very busy right now, but it's not always busy with the right kind of business," said Bruce H. Hoffman, executive director of the Maryland Stadium Authority. "We need that headquarters hotel. When [BACVA] wants to get a convention here with 6,000 rooms, we'll have a shot at it."
For intermediate-size meetings in Baltimore, those requiring 500 to 999 peak room nights, fiscal 1999 has brought 56,508 room nights, 31 percent over fiscal 1998 and 43 percent above 1997.
But meetings that require 1,000 to 1,500 peak rooms -- a main target of the newly expanded convention center -- show significant losses. Room nights booked this fiscal year for meetings of that size have fallen 27 percent to 34,760 room nights, compared with 47,710 in fiscal 1998.
"Here is where the new hotels would come in to help us," Armstrong said. And they do, to a certain extent, he said. But meeting planners don't wait forever to be shown concrete proof that hotel rooms will be available. One group that has tentatively booked for 2004 will wait only a few more months before taking its business elsewhere, he said.
"But that's contingent on the Hyatt," Armstrong said. "We have until June to show them something. Otherwise, we're going to lose out."
Meetings described as citywide, numbering 1,500 or more peak nights, are up by 33 percent over 1998, according to BACVA.
Looking ahead, there are 186,998 room nights booked for citywide events in calendar year 2000. That number dips to 132,687 in 2001, to 130,851 by 2002 and to 85,202 by 2003.
In the category of conventions that draw 10,000 to 12,000 attendees and require 4,000 peak nights, Baltimore is not doing well at all, Armstrong said. "That's an area we should be doing better in," he said.
"If we can get to the point where we can supply a minimum of 4,000 committable rooms within a mile of the convention center, having major convention hotels that can act as headquarters hotels, then Baltimore will become an alternative to Orlando, Atlanta and Boston," Armstrong said.
Pub Date: 4/25/99