Hutchinson Island will need another 300 hotel rooms if the Savannah International Trade and Convention Center is to grow its business, a consultant told the trade center authority Thursday, adding that the best way to achieve that would be through an expansion of the already existing Westin hotel property.
Speaking to a special meeting at the trade center, Mark Woodworth of PKF Hospitality Research in Atlanta presented his company’s findings on the potential growth of Savannah’s convention industry and the issues that are holding it back.
“The addition of 300 hotel rooms on the island will enable trade center management to compete more effectively for a greater number of regional conventions and perhaps a few more national meetings,” Woodworth said, adding that if talks with the Westin prove unsuccessful, the trade center authority should consider talking with developers about a freestanding, 300-room hotel on land just west of the trade center.
“However, considering the superior development and operating efficiencies associated with a guest room expansion — as compared to the ground-up construction of a free-standing hotel — the first option is certainly more attractive,” he said.
The trade center staff and Westin management began meeting last fall to discuss the possibility of an expansion. With the completion of the study, those talks are expected to ramp up.
A double-edged sword
As one of the first areas to recover from the downturn, Savannah has a strong and stable lodging market, Woodworth said, but that can also present a problem for the city’s convention business.
“The prospects for continued growth here are such that we estimate an additional 2,937 upper-priced hotel rooms could be supported throughout the entire metro Savannah area between 2016 and 2018,” he said.
“But the consistently strong performance of Savannah’s lodging market, particularly within the Historic District, means there is no economic motivation for those larger hotels on the Savannah side of the river to make inventory available to the convention center,” he said.
Add to that the fact that convention planners don’t like to split their groups into multiple, scattered hotels, and the need for more rooms on the island is clear, he said.
With the addition of hotel rooms, the trade center will most likely need to expand its ballroom, meeting and exhibit space, Woodworth said.
“An expanded Westin with 703
guest rooms would need 28,000 square feet of ballroom space and 14,000 square feet of meeting rooms,” he said.
Considering what the Westin currently offers, 17,000 additional square feet of ballroom space and another 9,000 square feet of meeting room space would be needed, the study concludes.
That meshes well with the smallest of three possible expansion scenarios the board looked at last year. That scenario called for increasing exhibit space by 50 percent while adding a second ballroom and eight additional meeting rooms at a projected cost of $50 million.
All about timing
In what is considered a rare feat for the convention industry, the trade center finished fiscal 2014 in the black, nearly $1 million better than budgeted and bolstered by higher-than-expected hotel/motel tax revenues.
Encouraged both by its numbers and requests from larger convention groups, the trade center authority in July engaged the PKF group to study the potential for a new convention hotel and the expansion of the trade center, as well as develop an overall strategic plan for convention business in Savannah.
The $163,000 study provides the first comprehensive look at Savannah’s potential convention business since 1992, some eight years before the trade center was completed.
The timing is good, said authority chairman Mark Smith, as several of the trade center’s largest convention clients have indicated they need more room.
Among them is Gulfstream Aerospace, whose suppliers and operators conference brought 1,500 participants to the trade center for 10 days, creating an overall economic impact to the community of nearly $800,000, Smith said.
“Gulfstream indicated they are very happy here but are rapidly growing their events and would very much like to see both an expansion of the trade center and the addition of a convention hotel on the island.”
Other clients have expressed similar sentiments, said trade center executive director Bob Coffey.
What’s next?
The recommended strategic plan, as outlined by PKF to the authority, contains the following steps:
• Engage the owners of the Westin in an effort to construct a 300-room addition.
• If talks with the Westin are not successful, consider building a freestanding hotel of 300 rooms on the other side of the trade center. “Absent an expansion to the guest room capacity on Hutchinson, there is not sufficient need or evidence to support expanding the center in the immediate future,” the study concludes.
• If the trade center should partner with the Westin, the center should enhance the connectivity link between it and the Westin by improving flow and the overall visitor experience.
•Perform general upgrades in the trade center’s existing space.
• Monitor trade center usage as its relationship with the Georgia World Congress Center matures.
• Evaluate the impact of the new hotel block as it comes online.
PKF also looked at Savannah’s proposed new arena and civic center west of the Historic District and concluded that it would likely yield little positive benefit for the trade center.
“If the planned new arena were to be located on a site that would more positively stimulate Savannah’s destination appeal to visitors, then area hotels and meeting venues, including those on Hutchinson Island, would benefit,” the study said.
Smith wrapped up the meeting with an explanation of the authority’s responsibility as it relates to the trade center.
“We have on this island and in this center, more than a $100 million in public investment for the convention industry,” he said. “I see our mission as an authority to leverage that investment to best benefit the community. That’s what we’re asking today — what can we do to maximize the return on our investment.
“A 300-room expansion on this island is going to generate millions in economic impact in room sales, food and beverage sales and increased visitors. That would be done through private investment, using no public money.
“The trade center building is a different story,” Smith said. “If we decide that an expansion is needed, it’s up to us as an authority to determine how the building expansion gets funded, whether it’s through bonds or SPLOST funds or some of the authority’s cash flow monies.”
MORE INFORMATION
To read the study or learn more, go to http://savtcc.com/savtcc/news/