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The City of Baltimore Hires a Hotel Asset Manager to Act as a Performance
 Watchdog for the Controversial Hilton Baltimore Convention Center Hotel
By Jamie Smith Hopkins, The Baltimore SunMcClatchy-Tribune Business News

Dec. 5, 2006 - The city has named an asset manager to act as a performance watchdog for the Hilton Baltimore Convention Center Hotel, a controversial project that boosters hope will improve the city's lagging meeting business.

Massachusetts-based Capital Hotel Management LLC, which has worked as asset manager for two municipally owned convention center hotels like Baltimore's, said yesterday that it was awarded the three-year, $560,000 contract. It teamed up on its bid with King, King & Associates, a minority-owned Baltimore accounting firm that will get about a quarter of the fee.

Hotel asset managers are hired to keep a close eye on locations for the owners, ensuring they're well-managed -- from staffing to marketing. Capital Hotel Management will also watch to see that Hilton Hotels Corp., the operator, lives up to its agreement with the city, which includes setting aside a block of rooms for the convention business.

Construction on the hotel, which began in February, is expected to conclude in August 2008.

Baltimore Hotel Corp., the nonprofit created by the city to oversee the hotel, had to select an asset manager no later than 12 months after bonds were issued for the $301 million project. Though the decision was announced yesterday, Capital Hotel Management has been on the job for a month.

"What we liked is that they had experience in managing a publicly financed deal," said Irene Van Sant, project analysis director for Baltimore Development Corp., the city's economic development arm and also project manager for the hotel.

Until construction is done, Capital Hotel Management will follow Hilton's pre-opening bookings -- a total of nearly 37,000 room nights in the first three months of sales, which began in July. Van Sant called it a "very aggressive" performance.

"It's a little soon to reach any final conclusions, but so far, so good," said Bruce Stemerman, executive vice president at Capital Hotel Management and project director for the Baltimore contract.

The convention industry is increasingly cutthroat nationally, with cities fighting for shrinking business. Critics of publicly financed convention hotels say that most have not lived up to expectations, and there was debate in Baltimore about whether the city ought to be footing the bill. The hotel is one of the city's largest publicly financed projects.

Tourism officials have said for years that they need a headquarters hotel with guaranteed room blocks they can use to attract larger potential customers. The Hilton site, on Pratt Street, is directly west of the convention center and will be connected by a covered walkway, another selling point.

It has not been a great time for Baltimore's convention efforts. The Baltimore Area Convention and Visitors Association has been without a permanent leader since Leslie R. Doggett resigned in May for health and family reasons, several months after she had last been to work. And the group's performance did not improve over the summer, the first since construction on the hotel began. It booked 13 percent fewer room nights for future convention dates than it did last summer, though the number was still substantially better than the summer of 2004.

But Ronnie Burt, interim president and chief executive of BACVA, said yesterday that he is seeing clear signs that the hotel is making a difference.

He offered as examples the Institute for Supply Management, which signed on to bring its annual 2,500-person convention to Baltimore in 2012, and US Lacrosse, which agreed to hold its annual 5,000-person convention in the city in 2009 through 2011. Both, he said, waited until the hotel would be available.

His group can offer up to 600 rooms at the Hilton hotel -- 80 percent of the project.

"That hotel will open us up to customers that we haven't been able to accommodate before -- i.e. larger groups and groups that were specifically looking for a convention center hotel," Burt said.

Michael Hirsch, the area vice president for Hilton responsible for the Baltimore project, is pleased with the advance sales for rooms. Booking years range from 2008 to 2013, all for convention center business.

"We're ahead of our expectation at this point," he said. "There's been tremendous interest from corporate groups as well."

Stemerman, from Capital Hotel Management, said he thinks Baltimore is positioned to do well because it has tourist-friendly amenities such as the Inner Harbor and lower prices than some East Coast competitors. The new hotel will only help, he said.

Capital Hotel Management beat out one competitor for the asset manager job, HVS International.

Both had prior involvement in the hotel project -- Capital Hotel Management as an adviser when the city was negotiating its deal with Hilton, and HVS International as the author of a feasibility study.

jamie.smith.hopkins@baltsun.com

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Copyright (c) 2006, The Baltimore Sun

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