Jackson Jambalaya

Interesting the hotel's defenders mention the $8 million in depreciation as a noncash expense but don't mention the waived real estate taxes as a noncash revenue. Article also mentions the potential need to dip into reserves, which begs the question of how much of an interest reserve was funded into the bond issue.

Bwaaaa....aaaaa.....aaaaa.....aaaa!!!!! Poor poor pitiful me!!!!!!!!!!!!!.....Bwaaaaa....aaaa...aaaa...aaaa!

The King Edward is a beautifully renovated hotel two blocks away from the convention center. It is struggling badly. But the politicians tell us we need to build another hotel for which the taxpayers will be on the hook. Yea. That makes sense.

This comment at the linked article works here.

Forget the whole a wise man knows crap....I told you so, told you so, told you so. The Baltimore City entity cannot balance it's own operating budget, cannot police it's own politicos, and certainly hasn't been in any position to run or oversee any real estate operation. This project was was set up to make some builders money, it took care of fat cat buddies, and some back door political favors. It was a mistake when it was planned and a mistake when it was built. If the hotel was a gold mine property than Sheraton (Starwood Hotels & Resorts) or Hilton (Blackstone Group) or Westin or any national chain would have been begging and pleading to buy the land from the cash strapped city instead of working out a deal to manage a property (way to go Hilton) that you didn't have to finance.

Once again, Baltimore politicians fed empty promises to the citizens.

Does any of this sound familiar?
From the Hilton Hotels press release announcing the start of the Baltimore project.

"In collaboration with the City of Baltimore, we are thrilled to be able to announce the start of construction on this important project," says Ted Ratcliff, Senior Vice President, Hilton/Doubletree Eastern Region, Hilton Hotels Corporation. "With a fabulous location tied into the Baltimore Convention Center, upscale Hilton amenities, and a variety of leisure and dining opportunities in the hotel and surrounding neighborhood, the Hilton Baltimore will help boost Baltimore's status as a prime destination for national conventions."

Or maybe this?

This project is a great addition to Baltimore's tourism offerings, enabling us to attract the kind of large conventions to the city which currently cannot be accommodated,' says M.J. 'Jay' Brodie, Chairman of the Baltimore Hotel Corporation. 'The new hotel and surrounding grounds will provide first-class lodging services to Convention Center guests, business and leisure visitors, and to the residents of the City of Baltimore.'

The Baltimore Area Convention and Visitors Association (BACVA) also supports the project. According to Jeff Hungate, BACVA's chief operating offer, 'It is clear that conventioneers want to come to Baltimore. The new hotel will allow us to bring more visitors to our great city.'
http://hotelexecutive.com/newswire/332/hilton-announces-baltimore-convention-center-hotel


If I was grading papers and noticed similarities like this I'd check for plagiarism. Since it's the real world we know that's how they polish their balonies. By issuing amazing PR. Everyone can be unique and profitable sucking the government tit.

What will "JCVB" commenter have to say about this?

No need to quote from the bond downgrades to be found at Moody's and at Standard and Poor's.
The opinions there were probably a major source for the negative coverage.
It only hurts if you are holding the bonds or ARE ONE THE TAXPAYERS ON THE HOOK TO PAY IT OFF.

Moody's:

http://webcache.googleusercontent.com/search?q=cache:SpoDaePoIu4J:www.alacrastore.com/research/moodys-global-credit-research-MOODY_S_DOWNGRADES_THE_BALTIMORE_HOTEL_CORPORATION_S_BONDS_OUTLOOK_REMAINS_NEGATIVE-PR_226547_809167237+"baltimore+revenue+bonds""+%24300.9+million"&cd=6&hl=en&ct=clnk&gl=us&client=firefox-a

Standard and Poor's:

http://www.bondsonline.com/Todays_Market/Credit_Rating_News_.php?DA=view&RID=19541

But the cash flow is positive and the $9 million in depreciation expense is only on paper.

Future looks bright!

The hotel has not reached a stabilized occupancy of 74% in 2011 as ownership forecast and faces a 12% increase in debt service payments as the principal payments begin in 2012.

Additional info on the deal structure (Hilton's $25 million debt service guarantee and other details) here

http://webcache.googleusercontent.com/search?q=cache:9J8BoaanNUUJ:swerdling.com/projects/baltimore.html+series+2006A+senior+secured+revenue+bonds""baltimore+hotel+corporation"&cd=2&hl=en&ct=clnk&gl=us&client=firefox-a

CUSIP #s for the bonds here (under
Baltimore Hotel Corporation)

http://www.docstoc.com/docs/88310255/SP_-XL_Capital_ratings121907

It's the holidays and I don't have access to my usual resources, but if someone puts up a link to the bond offering documents I'll take a look at them later. Have to go for now.

Happy New Year.

There is a reason for assets to be depreciated. People can argue about whether the book value resulting from it's accumulation reflects reality; but the only way to know for sure is to know what the building's value will be either in 2034 when the bonds mature, or at any point in time before then when the bonds are refunded and refinanced.

What are most 30 year old structures like this worth lately?
There are plenty of consultants telling governments they are obsolete money pits.

I wonder what the "idiots" in the market research department at Starwood (Westin) must be thinking with all of the gloom and doom from the local yokel experts above.

Clearly they don't have a clue in what they are doing and have never done a project like this before.

How could they possibly know what they are doing when all of these experts can help then before they make a big mistake with their investment?

How much up front cash is Starwood investing in the building?

I assure you a hotel downtown for anyone would be a bust. Market research be damned!

Look at Shreveport. They built a nice convention center and a Hilton next to it. If the city of Jackson bids head to head for a convention, who would choose here when there are so many other locations nearby.

Well the good news is the the high school graduation attendees will have a nice hotel to ravage.

I think I read earlier today that Shreveport has had some success with their hotel and CC.

Never fail to RUN from tax payer funded joint ventures with private developers. It is nothing more than a scam....everytime...

Yeah 8:00. The Superdome is clearly a scam.

YO! Turbo! the Superdome has a CASH STREAM and some funky hotel in cracktown (Jackson) catering to family reunions, birthday parties and high school dances doesn't!

9:00 here. Just pointing out the hollow argument from 8:00.

Hypothetical "devil's advocate" question:

Why in the world would I consider bringing
a Southern Regional Convention to Jackson, MS ?

My options are New Orleans, Memphis, Biloxi, Mobile,Pensacola, Baton Rouge , Little Rock ,
Dallas, Atlanta, ect.

I'm not knocking Jackson, .... I would just like someone to explain why I should consider Jackson ?

The reason Baltimore's hotel failed and Jackson's will succeed is simple - Jackson will have 17 blues clubs a mere three blocks away. Once we get our blues club theme park built on Farish Street, crime will vanish and tourists will materialize and (in deference to you, 5:18) both regional and national conventions will line up to come here.

Hasn't this been made eminently clear by the DJP, the JFP, David Watkins and the other usual suspects?

You get the NO Saints to play their home games in Jackson and then we can talk about putting taxpayer money into a deal. Nine days a year of guaranteed huge crowds and the taxpayers will only have to subsidize the other 356 days of the year ;-)

But first get someone willing to put their money into the Hornets across the street (worst attendance in the NBA, or so I'm told).

Seriously - I've been involved with national meetings for my professional group since 1986 - do any of the local boosters have any idea what groups look for when looking for a city for a meeting, and how far down on the list Jackson would be in attractiveness? Seriously, what else is here? Pro sports? World class museums? World famous restaurants? World class shopping? World class architecture? The Liberty Bell? Golden Gate Bridge? The Alamo? Direct flights from numerous US cities?

Seriously......

You people are driving Ben to Ambien and other resources. And Leland is gonna getchu, one at a time. He only works for a penny and is a true believer.

Seriously- Come to Jackson home of 2 Gutta. No other city can claim to be home of 2 Gutta.

No doubt a new arena, convention center hotel and fancy downtown pond/lake will magically solve this problem.

Another Jackson tourism success story.

Hey 1248, 302, 454, 605: do the letters GTFO mean anything to you?

Jeezus, some of you need to get lives. Do you really sit at your computer all day, doing nothing productive, just waiting for a story to break which gives you the opportunity to post something negative about Jackson... or does it just seem that way to me?

If it is such torture to live here -- and I mean this sincerely -- please move away. I am serious. You obviously know of a glorious city out there somewhere where there is no crime, no injustice, no politicians, no evil developers trying to "make money" by bringing new things to the city (the horror!). First, tell me where this Nirvana is, as I am very interested to learn; Second, MOVE THERE. PLEASE!

/Where's the tylenol?

OMG! This issue was like so last year! And someone else was on top of the story years ago so, like, just stop!

January 5, 2012 2:26 PM appears to be on the verge of a near-stroke.

2:26- I'm new to the internets. WTF do all these acronyms mean? GTFO???
SRSLY

Parkway pulling out of Jackson. OUCH!