May 31–The city-owned Hilton Baltimore convention center hotel lost $5.2 million last year — struggling even before the unrest that followed the arrest and death of Freddie Gray negatively affected the city's economy.
It was the eighth consecutive year that the hotel has underperformed financially, according to an audit of financial statements released Tuesday. Under the deal's initial projections, the hotel was supposed to be making $7 million a year in profit by now.
The hotel made about $2.9 million less from room bookings in 2015 than it did in 2014, the documents show.
Many hotels struggled in Baltimore last year after Gray's death in April from injuries sustained in police custody sparked protesting throughout Baltimore — and two nights of looting and violence.
But the Hilton had to dip into reserve accounts to cover a bond payment even before the unrest.
"In February 2016, the Corporation drew $403,941 from an operating reserve account and $1,922,921 from the site specific hotel occupancy tax account in order to fund a semi-annual bond payment due in March 2016," the filings state. "The timing of this payment follows a several month period that is typically slow in the Baltimore hotel industry, and the Hotel was unable to fully fund the payment strictly with Hotel operating cash flows. The draw does not violate the terms of the bond agreement, and the Corporation continues to maintain adequate funding in the reserve accounts for future years. Management is working diligently to increase operating revenue to prevent the need to draw on reserve funds in future years."
The hotel reported positive cash flow but its profitability was hurt because its assets depreciated by more than $8 million last year.
The 757-room convention center hotel opened in August 2008, two years after then-Mayor Martin O'Malley and the City Council authorized more than $300 million in tax-exempt bonds to finance its construction.
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