Problems are so pervasive at the organization responsible for bringing conventions and tourism to Baltimore that it will take at least three to five years to turn around, experts say.
The troubles are so deep and have been ignored so long that a complete overhaul of the Baltimore Area Convention and Visitors Association's staff may be required, those experts add.
Further, they say, it is evident that the organization's board of directors failed in its responsibilities and Mayor Martin O'Malley should consider replacing the 15-member board.
"They may need to literally go in and ... start over," said Peter Lytle, managing partner of the Business Development Group, a Minneapolis turnaround firm. "They may have a staff that is poisoned."
O'Malley and Clarence T. Bishop, chairman of the association, declined to be interviewed.
The mayor has refused to discuss with The Sun the association's problems since November, when the newspaper reported on a secret plan to remove the head of the organization in a way that would "save face" for everyone.
The association has been foundering for the past six years, and its executives were sharply criticized by an outside consulting firm, whose findings were released last week in summary form.
The association and city officials have refused to release the full report prepared by Performance Management Inc. of Stamford, Conn.
The summary rebuked the association for weak leadership, a poorly managed sales team and for being ineffective in booking convention and tourism business to Baltimore -- its primary mission.
The operation also is burdened with too many layers of management, has poorly defined roles and responsibilities for its employees and problems with internal controls, including auditing, the summary report said.
"Clearly, something has to be fixed," said William A. Hanbury, an industry turnaround specialist who is now president and chief executive of the Washington D.C. Convention and Tourism Corp.
"If it doesn't get fixed, it will do harm," he said, when informed of the evaluation's summarized findings.
On Feb. 1, Carroll R. Armstrong was forced to resign as chief executive of BACVA, a post he held for seven years.
Bookings for hotel rooms in the first half of this fiscal year had fallen 62 percent from a year ago; the convention center's operating deficit was swelling and is expected to nearly double this fiscal year and continue to increase in fiscal 2004.
Despite promises that a $151 million expansion of the convention center, completed five years ago, would lure significantly more business to Baltimore, the complex was drawing smaller crowds than before the expansion, The Sun reported in June.
Instead of the 50 conventions a year projected by a 1993 feasibility study of the convention center expansion, the convention center has attracted a high of 41 conventions and a low of 26. The association said it booked 40 conventions in the city last year. But the number is misleading because it included events that previously BACVA regarded as smaller meetings.
Combined convention and trade show attendance, the two most important categories, has never reached the 330,000 projected by supporters of the expansion. Attendance has ranged from a low of 192,625 four years ago to a peak of 234,394 in fiscal year 2001 -- only 1,000 more than a decade earlier. Attendance last year was 220,317.
Total attendance, which includes everything from small meetings to large conventions, was 582,920 last year, well below that of the late 1980s and early 1990s, when attendance regularly topped 600,000 and nearly reached 700,000 in fiscal 1990.
Despite those problems, the city is proceeding with plans to spend millions of dollars on a new convention headquarters hotel, although there is wide skepticism that a hotel would solve the acute troubles of the convention complex.
The convention and tourism association's problems are so severe that it will likely take years to restore the organization to health, experts said.
Although morale may be improved within months, it will take much longer to revive the convention and trade show business in Baltimore, said Bill Geist, president of Zeitgeist, a Madison, Wis., consulting firm that works with conventions and visitor bureaus.
"You're looking at two to three years to see the impact of the change," he said. "I think by the end of the year you can see a lot of new business on the books, but it will be 2005 before it starts to play out in money in the hands. The big, national groups -- that's going to take a while."
Hanbury, who has turned around three convention operations, said each one took two to three years "before things started to gel. It takes time," he said. "You are not going to make a quantum leap."
Alexander Horniman, a professor of business at the Darden Business School at the University of Virginia, said a turnaround could take up to five years. "The fundamental nature of the organization has to change. A fundamental change takes two to five years."
Allison Adams, chairwoman of the Hospitality & Tourism Management Department at Grand Valley State University in Allendale, Mich., called the association's problems "hugely serious."
When informed of the summary's conclusions, she said: "What bothers me the most, is that there were a lot of different" failings.
Areas of critical concern, experts said, are the sloppiness of the association's internal reporting controls, financial reporting and accounting system.
The summary report noted that the association overstated its number of members by 220 in fiscal 2002, "and by more for the prior two years." Its revenue has been "consistently overstated in reports relative to actual financial information."
And BACVA's financial statements, which are prepared by city employees, are often four months late. "The capability to control budgets and project cash flows is severely diminished with the problem acute as year-end approaches," the summary report said.
"If you can't close the books within 30 days, you are too far out," said Lytle, the Business Development Group partner. "How do you manage a business without knowing how much money you have? It is not really possible."
The association has also suffered by its inability to retain sales people, who are critical to the organization because they book hotels and the convention center.
Over the past four years, BACVA has had three different executives heading its sales group, and there has been a "high level" of turnover among the sales team, the summary said.
Morale is low and the "disconnect between senior management and staff is large," the summary said.
"In a well-run organization, people have high morale, they get the job done and they live up to the budgets," Horniman said. "Something's amiss when you have the kind of performance and internal dynamics you're talking about. The problems sound to be quite deep, quite significant."
Many -- perhaps all -- of the employees might have to be dismissed if the city is serious about correcting the association's problems, some experts warned.
"That is going to be hard for someone to turn it around without cleaning house if he [Armstrong] had a team that had similar attitudes to him," Adams said. "If they weren't strong because they didn't have the tools, then it could be quite salvageable."
Others experts argue that BACVA's board of directors bears as much responsibility for the association's troubles as Armstrong.
"The board has ultimate accountability for what's going on," said Andrew Ward, assistant professor of organization and management at Goizueta Business School at Emory University. "If there are problems, it's their responsibility to monitor what's going on in the organization and make changes."
Ward said that the board can't be held accountable for "every blip," but "they are accountable when there's sustained underperformance of the organization."
It is unacceptable, he said, that the board could be unaware of BACVA's problems for so long.
"In a two- or three-year period, you would expect that if the organization is seriously under-performing its peers, you could ask questions if the board itself is performing," Ward said. "If they're appointed to oversee and protect the investment the city's putting in, there should certainly be questions asked about whether they've been fulfilling that role."
O'Malley appoints the members to BACVA's board and Bishop, the chairman, is his chief of staff. Other board members, all volunteers, include politicians, media, hotel and real estate executives. They help guide the association, review its budget and work to help it attract tourists to the city.
Regardless of whether board members are paid or volunteer, they must be held accountable for BACVA's problems, experts said.
"They're responsible for knowing why things work and don't work and for taking action," Horniman said.
Horniman said the entire board should be replaced. "It seems to me you've got to take action at all levels," he said.
Dennis R. Judd, professor of political science at the University of Illinois at Chicago, who studies the practices of boards of directors, said that swift action must be taken.
"It happened on their watch. They ought to resign and let others come in," Judd said.
Any recovery, however, will be a slow one, experts said, especially since competition for convention and tourism business is intense and the industry is not growing.
Lytle, the Business Development Group partner, said BACVA officials must re-evaluate the association's goals and objectives and build for the future. "They may need to go back and totally rethink their needs, what objectives they are going to be going after," he said.