Wed., May 11, 2011 5:36pm (EDT)

Savannah's Hotly Debated New Hotel
By Orlando Montoya
Updated: 3 years ago

SAVANNAH, Ga.  —  
The proposed hotel on Hutchinson Island near the Savannah International Trade and Convention Center has prompted a vigorous debate over the role of public financing and the viability of convention hotels in an uncertain economy.  (photo CMMI Architects)
The proposed hotel on Hutchinson Island near the Savannah International Trade and Convention Center has prompted a vigorous debate over the role of public financing and the viability of convention hotels in an uncertain economy. (photo CMMI Architects)
The developer of a proposed hotel in Savannah is being overly optimistic about its chances for success.

That's the conclusion of a consultant hired to run the numbers for some skeptical members of a local board.

The Savannah Trade and Convention Center Board has wrestled with the hotel for months.

The hotel's developers want millions of dollars in public bonds to help build it next to the center.

At a contentious meeting on Wednesday, a consultant hired by the panel laid out several scenarios in which the hotel wouldn't make money.

That would put any public loan at risk for default.

"Relatively small changes in the occupancy rate will have a significant effect on revenues," says Dick Layton of the Atlanta-based Baird consultancy. "There's a revenue swing of $6.4 million in the first year if you take more conservative assumptions."

Board chairman Mark Smith says, Layton didn't even assume the worst case.

"In a project like this, you must have realistic or conservative projections so that in the event there is a downturn, the debt service is still covered and it does not put the county taxpayers at risk," Smith says.

The consultant's gloomy outlook prompted a vigorous defense by the developer, Texas-based Journeyman Austin Holdings, and hotel supporters.

County Commissioner Pat Shay says, Layton's numbers rely on recession data from the nearby Westin Habor Resort.

"I don't agree with his model," Shay says. "He based it on a resort hotel from 2007 when it's going to be open in 2014 and be a convention hotel with a completely different business model."

The hotel has generated controversy because it could get taxpayer support, compete with existing hotels and be a taxpayer liability if it fails.

County officials want the hotel because it could help attract large conventions and bring in more tourism revenue to this tourism-dominated coastal city.

Local union representatives also showed up at the meeting.

Lately, they've taken out advertisements highlighting how the project could boost local construction hiring.