|By Steve Kilar, The Baltimore
SunMcClatchy-Tribune Regional News
May 25, 2012--The operators of Baltimore's city-owned Hilton gathered Thursday to defend the hotel's financial reputation, saying it has enough cash to cover its costs and emphasizing that city taxpayers are not on the hook for expenses or losses.
Last year, the hotel lost $11.5 million. Most of that loss, about $9.6 million, can be attributed to accounting requirements, which do not represent cash losses, said M.J. "Jay" Brodie, who heads the Baltimore Hotel Corp., which oversees the Hilton's finances.
The hotel, constructed using more than $300 million in tax-exempt bonds issued by the city, had enough cash on hand last year to pay for its operating costs and debt service, Brodie said.
Brodie also emphasized that the city and its taxpayers are not responsible for hotel expenses or losses.
Though the Hilton has had higher revenue per available room than its competitors for the last phree years, the hotel and its companion convention center need to do a better job drawing business to turn a profit, said Irene Van Sant, a project analysis director for the hotel corporation.
To push the hotel toward the black, Van Sant said, the occupancy rate needs to rise at least 7 percent. The rate was 63 percent in 2011.
It would also help if a higher room rate could be charged, though that is largely dependent on the economy improving, Van Sant said. Last year's average daily room rate was $171.53.
The corporation released its annual audit this week. Among its findings:
-- Cash at year's end declined from 2010 to 2011, from $9.7 million to $7.2 million. The corporation projects an even lower cash amount at the end of 2012 -- $6.9 million.
-- The hotel's revenue declined 2.5 percent in 2011, to $54.5 million. Room revenue declined from $30.2 million in 2010 to $29.9 million last year.
-- Earlier this year, the corporation had to withdraw about $4 million from a $9 million operating reserve fund to make a semiannual debt payment. Still, the corporation expects to have nearly $25 million in reserves at the end of 2012.
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