June 22, 2009 - --Hilton Vancouver Washington, Vancouver's city-owned downtown hotel, continues to struggle with a sluggish economy and dwindling group bookings.

During the first five months of the year, the hotel-convention center's profits were 36 percent below what was considered to be a pessimistic budget when it was adopted in late 2008.

The project registered a $103,000 operating loss for those five months, said Janet Frank, Vancouver accounting manager, during last week's meeting of the Vancouver Downtown Redevelopment Authority board of directors.

Tax subsidies to the project also are down. Through the first five months of 2009, $842,600 was netted from the city's lodging tax and from two 0.033 percent state sales tax credits that flow through Vancouver and Clark County.

That's a 14 percent drop from how much those three taxes generated during the same period in 2008, a reflection of a sagging economy that not only has driven down lodging but consumer purchasing as well.

Frank said it likely will take the entire year to reach a $1.96 million cap for returning excess tax revenues to the county under the project's complicated financial structure.

Last year, those taxes exceeded a slightly lower cap, $1.91 million, by Oct. 1, Frank said.

Hint of good news

There is a glimmer of good news. The Hilton's revenue topped $1 million in May, the first time since October 2008 the hotel-convention center reached a financial plateau that tends to differentiate between a good and bad month.

Revenue for June also are expected to exceed $1 million.

Tom Morone of Warnick and Co., the firm the city hired to look out for its interests and to work with Hilton, said the business is hurting, albeit not as much as hotels nationwide.

Budget projections were based on a pessimistic assessment for the first half of the year followed by an expected uptick during the second half.

"We're not out of the woods yet," Morone said. "Our year is still dependent on a good summer and fall."

Group bookings for conventions and other events remain the "bread and butter" of Hilton's business, he said.

During this year's first five months, Hilton's sales team signed up 4,485 group room nights, a 65 percent reduction from the 12,893 room nights booked during the same period in 2008.

"There's no silver bullet on the horizon," Morone said. "If that booking doesn't come back, we are going to be anemic in our performance."

The hotel recently lost out on a group booking to an unnamed competitor that was willing to go as low as $50 per room night.

"As supply will increase and demand will diminish ... you are going to see prices change," said Gerry Link, the hotel's general manager. "They will come back."

With a lousy economy, it becomes even more imperative to control expenditures, something that Morone said Hilton is doing.

"We continue to think Hilton is doing a good job at looking at every dollar they spend," he said.

The Hilton's best month came in October 2007 when it generated monthly revenue of $1.45 million.

Its worst month was last December, when revenues were less than half that amount, roughly $700,000.

The Hilton celebrated its fourth anniversary last week. The 226-room hotel, which has 30,000 square feet of convention space in two ballrooms and nine meeting rooms, opened on June 15, 2005.

The operation employs about 190 people with a 2008 payroll of $5.6 million.

Jeffrey Mize: 360-735-4542 or [email protected].

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