Public Losses

Government is designed to provide services that the public cannot provide itself. Government is not deisgned to be a hotelier, so it should come as a surprise to absolutely nobody that Baltimore’s publicly-owned money pit continues to take losses at a staggering rate:

The city-owned Hilton Baltimore lost nearly $11.5 million in 2011 — about $400,000 more than it lost the previous year, according to a recently released audit.

In addition to losing money last year, the hotel dipped into its reserves in February to make payments on its debt service.

The Baltimore Hotel Corp., created in 2005 to oversee the hotel’s operations, withdrew nearly $4 million from its $9 million operating reserve account to make a semi-annual bond payment in March.

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Fantastic. If you recall, this operation was the brainchild of then-Mayor Martin O’Malley, who sold the public on the idea that that a publicly-owned hotel would be both extremely profitable and would allow Baltimore to actively compete in the convention market. But that doesn’t seem to be happening either as conventions are looking toward places that have a better business climate than Baltimore.

Of course it was painfully to many that the people of Baltimore were being sold a bill of goods when it came to the hotel. Let me take you back to what I wrote in August of 2005:

The Mayor’s persistence on building a city owned hotel in downtown Baltimore is an absolutely absurd concept. I have yet to understand where 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. 

The writing was on the wall seven years ago that a city-run hotel was going to be a money pit for the city government, and that the economic benefit of constructing such a hotel was being grossly overstated in order to get this thing built at any cost. So after all of these years still seems like the only people who have profited from the city-owned hotel are the politically connected donors like the infamous Ronald Lipscomb to whom O’Malley gave the hookup.

If Mayor Stephanie Rawlings-Blake really wants to do something beneficial for the city, she should cut her losses and get Baltimore out of the hotel business.

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