Baltimore's convention and visitors bureau systematically inflated hotel room night bookings, membership and revenue, enabling top executives to win bonuses, according to an external evaluation of the organization that was released yesterday.
The stinging 83-page report on the Baltimore Area Convention and Visitors Association said it has used exaggerated numbers for several years.
"At best, it is misleading to the board and community, especially in that it is the basis for reporting economic impact generated by BACVA," the report by Performance Management Inc., a Stamford, Conn.-based consulting firm, stated.
The report also roundly criticized Carroll R. Armstrong, BACVA's former president and chief executive, and the association's prior boards of directors, which it described as little more than a "rubber stamp."
Armstrong, who was forced out after seven years on the job and resigned last month, could not be reached for comment. His attorney, Kurt L. Schmoke, said yesterday that he could not comment without his client's permission.
As mayor of Baltimore, Schmoke hired Armstrong in 1996 to head BACVA.
The report was released yesterday by BACVA, under intensifying pressure to make the contents public.
The document said the organization, whose principal job is to bring major conventions and trade shows to the city, knowingly used figures that wrongly gave the impression that BACVA was meeting or surpassing its business goals.
Inflating the number of hotel rooms booked through BACVA by conventions. In many cases, it included rooms that it had no role in selling. Last fiscal year, for example, BACVA reported that it booked 523,865 rooms. That number was inflated by 107,495.
The deception has gone on for years - even before Armstrong's hiring - the report said. But it added, "This should have been addressed and fixed seven years ago."
Artificially pumping up its paid membership, which includes area tourist attractions, businesses, restaurants and civic groups. Last year, BACVA reported that it had 880 members, when it actually had 220 fewer than that.
Sources close to BACVA told The Sun that Armstrong used his Christmas card list to boost the membership roster.
The discrepancy was even greater two years ago, the report noted, although it did not provide specifics.
Consistently overstating revenue. In the past three years, BACVA inflated revenue by $59,065.
Those practices, the report said, helped BACVA executives obtain large bonuses. In 2001, Armstrong received a bonus of $46,552 - equal to 27 percent of his base salary of $173,250.
"Incentive payments have been made based on these incorrectly reported numbers," the report said. The document said three others also received bonuses; they were not identified.
Although Schmoke did not respond, a source close to the outside review said that Armstrong retained the system he inherited for tracking hotel room bookings so that recordkeeping was consistent.
Clarence T. Bishop, chairman of BACVA and Mayor Martin O'Malley's chief of staff, said yesterday that he does not believe there was ill intent in inflating the numbers.
"I don't think any of it was malicious or with the intent to defraud or anything on that end of the negative scale," said Bishop, who spoke to The Sun for the first time in several weeks about BACVA's problems.
"I imagine the intent was to embellish and paint the picture as positive as possible. We as a city and an organization cannot rely on inflated or embellished figures. We need to know what the facts are, whatever they may be at the time the snapshot is taken in order to build on the real facts."
Bishop said he did not know the proportion of the bonuses tied to the inflated numbers:
"At some point, we will know the impact. To the extent it doesn't violate anyone's personal rights, we will make whatever findings we have public."
BACVA, which receives millions of dollars from the state and city, has been struggling for years and its problems have accelerated in recent months.
Bookings for hotel rooms in the first half of this fiscal year plunged 62 percent from a year earlier; the Baltimore Convention Center's operating deficit is 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 is drawing smaller crowds than before the expansion, The Sun reported last summer.
Yesterday's report blames many of BACVA's problems on Armstrong and paints him as a manager who frequently missed meetings with senior executives, presided over a management team that lacked cohesion and couldn't make decisions.
"It is universally known that the CEO fails to make timely decisions," the report says. "This is mentioned by staff throughout the organization."
As result, decisions were "frequently haphazard, unplanned, lacking thoroughness and in response to constantly changing and unpredictable priorities of the CEO," it said.
"Opportunities are lost, stakeholders are left frustrated and disappointed and senior management loses credibility with staff for failing to routinely address issues which are frequently trivial," the report said.
The document said Armstrong made decisions that damaged BACVA's chances of landing conventions and booking rooms in the city.
Last July, he ordered members of the sales team to review and reconstruct meeting files in anticipation of an audit. The staff spent three months on the project instead of pursuing business.
"This should never have been necessary ... ," the report said. "It was disruptive to the sales effort and indicated a complete neglect of fundamental good business practice in file and documentation management."
The report characterized BACVA's filing system as sloppy. During its audit, the consultants conducted a test check of 21 files for the year ended June 2002. Of those, nine were missing and had to be located, and four were incorrect.
"This is an error rate of approximately 19 percent, which is too high," the report stated. "It is therefore not possible for us to say the room night bookings reported for 2002 were correct."
The report also criticizes BACVA's prior boards of directors, which "historically rubber-stamped the goals offered up by the chief executive."
After Armstrong's ouster, the board named him a consultant to BACVA, citing the valuable services he could provide.