June 27, 2011--The city-owned Hilton Baltimore Convention Center Hotel is far from a thrilling piece of architecture. Its massive bulk blocks the view of the eye-pleasing Bromo Seltzer Tower for fans sitting in Camden Yards. But as a convention hotel designed to boost the tourism trade and offer jobs to local residents, it is off to a promising, if slow-footed, start.

That is the financial takeaway from a recent audit of the hotel prepared for the city's Board of Estimates. Now in its third year of operation, the 757-room hotel is taking in enough revenue to pay its bills and its 454 employees and to service its bonds. Its occupancy rate for 2010, 62 percent, and its revenue per average room, a little over $125 in April, are slightly above those for other Baltimore hotels. Both those measures are climbing.

The picture, like the perspective from the baseball stadium, is not perfect. After figuring in about $9 million for depreciation and amortization and another $2 million for marketing and for booking meetings in future years, the hotel showed a paper loss of $11 million for 2010. Initial estimates were that the hotel would show a profit of $4 million by 2014, a projection that now seems highly unlikely. Still, it is crucial to note that the hotel has not become a drain on city finances, as critics feared it would be before it was built.

And things are likely to get better. The city's hotel business is working its way back to the heights of 2005, when occupancy in city hotels was almost 75 percent. The recession and the on-again, off-again recovery have not helped. Rather than leading an economic revival, the hotel and convention businesses traditionally follow it.

Nonetheless, having a large new hotel that connects to the convention center has been a plus for booking conventions. The fact that 61 percent of the Hilton's bookings in 2010 came from groups is one sign that the premier hotel is attracting conventioneers.

If the expansion of the Baltimore Convention Center goes forward -- a Greater Baltimore Committee project that is attracting plenty of attention but also questions about its viability -- the number of conventioneers coming to Baltimore could jump drastically. While the plan for expanding the convention center could require temporarily closing one wing -- and, we assume, could thereby cause a short-term dip in hotel guests -- the long-term effect of doubling the size of the convention center could be a boon for the Hilton and other hotels. The expansion of the room capacity at the Sheraton (envisioned in the GBC plan as part of the proposal to expand the convention center and build a new, larger arena) would add only 180 rooms, not enough to have a meaningful effect on the much larger Hilton.

We supported building the Hilton in 2005, saying government making an investment in downtown Baltimore was good public policy. We still think that, and we can point to Oriole Park at Camden Yards, M&T Bank Stadium and the Inner Harbor as evidence of government-financed projects that have proved to be a boon for the citizens of Maryland. The Hilton appears to be on that path. And while many questions remain about the GBC's proposed expansion of the convention center complex -- a $900 million project of which taxpayers would need to finance about $400 million -- Baltimore's experience with the Hilton, so far, is certainly no argument against it.

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