The Greater Baltimore Committee (GBC) supports Baltimore City’s proposal for a publicly owned and financed convention center headquarters hotel. The importance and strength of the regional tourism and hospitality market and the demonstrated need for a headquarters hotel coupled with minimal financial risk to the City of Baltimore drive the GBC’s support for the project.
Hospitality and tourism and the convention industry are vital components of the region’s economy. According to the Baltimore Area Convention and Visitors Association (BACVA), spending from domestic travelers in 2002 was $2.8 billion in Baltimore alone. The convention center serves as a valuable asset to the tourism industry in the region. In 2002, the Baltimore Convention Center attracted over 415,000 attendees and spurred $183 million of tourism spending. Baltimore’s tourism industry is clearly on the rise and is in a strong position nationally. Occupancy rates at hotels near the convention center near 75 percent, compared to a national average of 65 percent.
A new convention center headquarters hotel in Baltimore provides the only missing tool to attract new convention business – the guaranteed block of hotel rooms in a single venue. The availability of suitable hotel rooms is a top factor in choosing where to hold a convention, with 83 percent of event planners identifying it as their main consideration. Two recent studies confirm that the majority of event planners consider a headquarters hotel an important component in their decision making. Surveys indicate that room block agreements (“committable rooms”), the kind only available at headquarters hotels, are increasingly important to event planners.
The hotel industry has changed markedly since September 11. Private investors are unwilling to take economic risks without significant public financial assistance. This is certainly the case in Baltimore, despite the robust health of the local tourism market. The GBC believes that a 100 percent privately financed hotel would be ideal, however, no such option was available. Recent events and new fiscal requirements of the hotel business have spurred new trends of financial innovation across the country, including public financing. Based upon the current financing trends and the lack of a legitimate privately financed option, it is evident that without the type of publicly owned and financed structure being proposed it is highly unlikely that a convention center headquarters hotel project would be developed and the city’s need for the hotel and growth of convention business would go unmet. The Baltimore Convention Center and the convention industry can not be expected to grow and succeed in this highly competitive market without the appropriate tools and resources.
The funding mechanism calls for tax-exempt revenue bonds. The full faith and credit of the City of Baltimore is not being called on as in the case of general obligation bonds. It is also important to highlight that the issuance of these bonds does not negatively impact the issuance of general obligation bonds that provide for schools, infrastructure, parks and parkland, and other important government responsibilities. Some will argue that rather than building a convention center headquarters hotel that the monies should be utilized instead for schools, infrastructure, and the like. The financing plan proposed, i.e.- the issuance of revenue bonds, are not conducive for those non-revenue generating public projects. However, a successful hotel will generate revenue for the city to use for many other public initiatives.
The Greater Baltimore region is experiencing new and varied growth. One needs only to look at the Baltimore skyline dotted with new buildings under construction, the emergence of a strong demand for residential properties and increased market values throughout the city, as well as a resurgence of the city’s spirit for evidence of this growth.
The Greater Baltimore Committee believes that the construction of a new publicly owned and financed convention center headquarters hotel will be another integral part of the urban renaissance of Baltimore.