Baltimore-owned Hilton Remains a Money Pit

All those years ago, I told you so

In 2005, the City of Baltimore started talking about building a hotel. A city-owned hotel.

Martin O’Malley, then Mayor of Baltimore, decided it would be wise to spend $300 million of city money to build a convention hotel next to the Baltimore Convention Center and next to Camden Yards.

At the time, a much younger me wrote:

The Mayor's persistence on building a city-owned hotel in downtown Baltimore is an absolutely absurd concept. I have yet to understand whether the city of Baltimore has the capital or the ability to construct a hotel at a cost of over $300 million dollars. Even more absurd when you consider that private developers have offered to buy the land and build the hotel for far less than the $300 million price tag.

This in a city that continually runs deficits in its school system. A city where the crime rate remains one of the highest in the country. A city where drug dealers rule many streets. To spend that amount of money on a business venture is nearly criminally absurd.

What makes it more absurd is the failure of other publicly financed projects of similar magnitude in other major cities. As the Sun cites, similar projects in Myrtle Beach, St. Louis, and Sacramento have been built at tremendous costs to the taxpayers, but without the expected benefits in bookings and revenues the city expended. And on top of those projects, the Rocky Gap resort in Garrett County and our very own Compass Pointe Golf Course are local publicly financed projects that have run in the red since their conception.

That hotel of course was built, and it became the Hilton Baltimore just outside of Camden Yards.

The hotel of course has been a boondoggle ever since, with massive cost overruns and plenty of attempts by Martin O’Malley to blame others. Who knows how much good money the city of Baltimore has thrown after the bad.

And yet, city government still continues to pay to keep the hotel afloat:

The City of Baltimore transferred an additional $3.1 million last month to the city-owned Hilton Baltimore Inner Harbor hotel, according to a recent financial disclosure, bringing the total amount of payments to about $16 million since the coronavirus pandemic decimated the hotel and tourism industry.

The Baltimore Hilton, on West Pratt Street overlooking Oriole Park at Camden Yards, was intended to lure more business to the convention center next door and has struggled to turn a profit under the crippling weight of its debt. After refinancing the bonds in 2017, the Baltimore Hilton continued to perform below projections, but it was eking out a profit.

Then, the coronavirus pandemic hit. The hotel has been bleeding money ever since, triggering cash infusions from the city of Baltimore.

Now nobody in 2005 could have accurately predicted a pandemic that crippled the tourism and hospitality industries. But the idea that a city-owned hotel would underperform and turn out to be a financial drag on the city was as predictable as the sunrise.

Now, Baltimore City is continuing to subsidize the operation of a hotel they never should have paid to build.

The best thing Baltimore City could do at this point would be to sell the hotel to the highest bidder and get out of the way. Even if the city would be required to pay penalties for selling the hotel before 2027, it would be better to just move the hotel to a private operator and get out of the way than to continue to let this hotel drag city finances deeper into the abyss.

It was obvious 17 years ago that the City of Baltimore should never have been in the hotel business. It’s just as obvious now that the city needs to get out of it.