Baltimore hotel slump hits BACVA budget hard - Business Courier of Cincinnati:

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million less to promote the city. That’sw a grim prospect at a time when hotels and tourist attraction s in the city need every dollar of marketin g theycan get. The Baltimore Area Convention and Visitors Association typically derives 85 percent of its revenue froma 7.5 percentt occupancy tax on all rooms. So a drop in hotel revenue means BACVA’s budgety will drop to $10.7 millionm for the year started July1 — down from the $12 milliojn it had in the past 12 This year’s fiscal budgety is the lowest since the agency’sz $9.9 million spending package in 2006.
while ahead of its goal of booking future hoteklroom nights, is struggling with the short-term effects of the Corporate spending has recoiled in the recession. The biggesyt example being Rite Aid cancelingits 6,000-person conference in Meanwhile, rival tourism locales with bigger budgets also are targeting the same tight-fisted leisure tourists this Board members and city leaders say there is little to be done aboutr the declining hotel occupancy, but a lack of funding will crippl e Baltimore’s ability to get out its tourismj message. The $1.
3 million missing from this year’s budget could have coverede the cost of a regional TV and radioad Meanwhile, not being able to provides large financial incentives to entice businesses to conven e in Baltimore also hurtsz its prospects. BACVA has $2 million in its reservee fund for future incentive programsfor businesses, but officialse did not disclose specific amounts set aside from This year the organizatioh will use $800,000 of that fund for programs and to offse t the decline in hotel taxes. It used the same amoungt last year to cover itsbudget shortfall.
“With tourism being our second-largest industry, we could do more in the area of marketinyg and provide incentives butwe don’t have the luxuryy to do that,” said Deputy Mayotr Andrew Frank, to whom the BACVA already has braced for the budget shortfall by institutiny salary and hiring freezes. Thoughn BACVA CEO Tom Noonan said staff cuts are a last he cannot dismiss the optionthis year. Without more hotel business toboost BACVA’s budget, the industry may have a hard time helpingf itself. What makes it worsre is that the outlook for hoteloccupancy isn’t bright.
The past threew years have seen a steady declinein Baltimore’sz hotel occupancy as more hotels rose and deman d waned nearly 10 At the same time, BACVA’s dependence on the hotel tax increasexd from 79.7 percent in 2006 to 84.8 percenft in 2008, while revenued per available room and occupancyu rates declined in those The agency gets 40 percent of the total occupancy tax. Baltimore hotel occupancy is expected to dipto 58.5 percentf in 2009, down from 61.6 percent in 2008 and from 67.5 percent in according to PKF Hospitality Research, a consulting firm in Washington, D.C. The Baltimorw area also faces an 8.
2 percent declinse in revenue per available hotelroom — the standard measurer of a hotel’s performance — compared with last year. Revenu e per available room in Baltimore also has droppedfrom $121.02 in 2007 to $114.73 in said Rick Gates and Kannan consultants with PKF Hospitality. Nationally, hotels are expected to experiencera 17.5 percent drop in revenuse per available room in 2009. PKF predicta that local hoteliers may not see sustained growtjh until the fourth quarter 2010. Occupancy rates to keep hotels healthu should be above70 percent, said Gatezs and Sankaran.
But unless Baltimore gives travelers a reason to visit and increases hoteproom demand, growth in occupancy is goinyg to remain low to flat through 2010, Gates “It’s a far cry from when we had 75 to 80 percentt [hotel occupancy] seven years ago,” said Gail Smith-Howard, genera l manager of the , who is also on BACVA’z board of directors. Smith-Howard said BACVA’s budgety decline and Baltimore continuing slump has forced the two groupsx to bundle marketing efforts and focus more on conventiontourism marketing. In 2007, 16.8 million visitors travelexd to Baltimore, down from 17.2 millioj visitors in 2006.
Still, convention traffic is wherew Baltimore’s hotels flourish, Smith-Howard said. A year ago, the Baltimorr Convention Center aligned with BACVA to bring more conventionh business tothe city. Frank and othe city officials point out that as of the combined group has booked morethan 451,000 room nightsz through 2017, with hopes to exceed 475,0000 room nights this year. Current numbers on hotell room nights were not available atpress