Ratings Agency says City Hotel May Have Trouble Paying Debt
Updated: Friday, January 18 2013, 09:58 AM EST
A major credit rating firm says the citys convention center hotel may have difficulty making payments on tens of millions of bonds in the future.
Moodys Rating Agency reaffirmed a negative outlook on the roughly $300 million dollars in debt the city borrowed to build the hotel in an analysis released earlier this month.
The agency cited lower than projected revenues, a poor economy, and an increasingly competitive convention business as the primary factors which could hamper the hotels future performance.
The firm also noted that the hotel had dipped into cash reserves to make debt payments.
The firm cited taxpayer support in the form of hotel occupancy taxes and improved performance of the property since the recession ended as recent developments that could have a positive effect on the hotels future performance.
The hotel was as touted as key to bolstering the citys sagging convention business when it won approval from the city council in 2005. Since it was opened in 2008 it has booked more than $50 million in losses.
However, city officials say the red ink is a paper loss, and that the hotel generates sufficient cash to pay its bills.
The hotel is operated by Hilton under a management agreement with the city.