May 23, 2012--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 $12.4 million of debt-service reserve accounts to make a semi-annual bond payment in March.

The Hilton was coming off several slow months and did not have enough money on hand to pay the full amount owed, the audit said.

The convention center hotel, on West Pratt Street overlooking Oriole Park at Camden Yards, opened in August 2008, two years after Mayor Martin O'Malley and the City Council issued more than $300 million in tax-exempt bonds to finance the hotel's construction. The hotel has lost $54 million.

In September, Moody's Investors Service downgraded the hotel bonds, but noted the then-untapped reserves as a strength of the bonds.

The reserve withdrawal did not violate the terms of the bond agreement, the audit said, adding that the Baltimore Hotel Corp. "continues to maintain adequate funding in the reserve accounts for future years."

The city's hotel corporation initially estimated the hotel would show an annual profit of $4 million by 2014.

The corporation declined to discuss the 2011 audit, which was completed in April and obtained by The Sun from the Municipal Securities Rulemaking Board on Tuesday.

The hotel had an average occupancy rate of 63 percent during 2011. The average rate for a night's stay last year was $171.53. The average occupancy and room rates did not change significantly from 2010. The corporation had projected slightly better performance for 2011.

Its revenue slipped 2.5 percent in 2011 to $54.5 million.

[email protected]

twitter.com/stevekilar

___

(c)2012 The Baltimore Sun

Visit The Baltimore Sun at www.baltimoresun.com

Distributed by MCT Information Services