The Atlanta lodging market continues to mature as new supply moderates and significant capital investments support the addition of new office and commercial projects for Atlanta�s skyline. The city�s convention and business lodging demand is anticipated to decline as the national economic downturn, accelerated by the events of September 11, has prompted corporate downsizing, a reduction in non-essential business travel, and an increase in office vacancies in response to excess supply and the technology sector fallout.

Atlanta�s dependence on tourism, airlines and technology may exert a disproportionate downward pressure on lodging demand in the wake of September 11. The anticipated moderate lodging supply growth through 2004 prior to waning economic conditions is anticipated to remain stable, mitigating the potential decline in lodging demand.  Furthermore, continued private and public sector investments in the downtown and suburban markets are anticipated to increase corporate-related visitation, inducing mid-to-long-term lodging demand. Long-term infrastructure improvements and airport expansions also bode well for future growth of Atlanta�s lodging market.

Major Demand Changes

The $220 million Phase IV expansion of the Georgia World Congress Center is nearing completion. It is anticipated to open by August 2002, bringing the total exhibit and meeting space to 1.4 million square feet and 320,000 square feet, respectively, with plans for additional expansions aimed to increase Atlanta�s market share of the convention business.  To date, however, Atlanta lost the Super Show to Las Vegas and Orlando for the following six years and is likely to lose a mega telecommunications show to Chicago through 2006.  These cancellations are primarily attributed to insufficient convention center space and hotel rooms.

Substantial investments in the downtown and suburban markets bode well for the hotel market in the mid-term.  Downtown, the $2 billion multi-phase Atlantic Station mini-city development is anticipated to house more than 10,000 residents and 25,000 workers. Construction of phase one, scheduled for a 2003 completion, is anticipated to commence in early 2002 with the construction of approximately 1,600 residential units, a 900,000 square foot retail and entertainment center and 150,000 square feet of office space. In addition, Turner Broadcasting System, Inc. is pursuing plans for a $1.2 billion expansion of its existing facilities. Plans include additions to the company�s Techwood facilities, a new 600-room hotel tower and a new 600,000 square foot office building, planned for completion in 2004.

Hartsfield International Airport anticipates passenger traffic to increase to a total of 121 million passengers by 2015.  As such, the airport�s initiatives include the addition of a fifth runway by 2005 in addition to other expansions over the course of 10 years at a total cost of approximately $637 million.

Major Supply Changes

Atlanta�s lodging supply increased by approximately 2.4% in 2001, primarily attributed to the addition of limited-service properties. Anticipated further additions to lodging supply include the following:

• A 250-room Ritz-Carlton destination resort in Greensboro, anticipated to open February 2002;
• A 198-room hotel in Midtown as a part of a 23-story, mixed-used tower containing 252 apartments and 73,000 square feet of office space, anticipated to open mid-2003;
• A 250-room hotel and executive conference center located on the Georgia Tech campus in Midtown, anticipated to open in the summer of 2003; and,
• A 600-room addition to the Omni Hotel at CNN Center, anticipated to open in 2004.

Political/Economic/Legal Changes

Atlanta is anticipated to experience a prolonged economic slowdown during 2002, due to the adverse effects of September 11th on the city�s airline, tourism and technology industries. Metro area downsizing occurred at Delta Air Lines and BellSouth following the attacks, totaling nearly 13,000 layoffs for the region.

In response to an increase in airline service from South America, Central America, and Mexico in 2001, the Atlanta Convention & Visitors Bureau launched a new international learning-based tourism program to attract executives of Latin American companies to bolster awareness of local tourism alternatives and to increase corporate travel from these regions to Atlanta.

A mounting challenge the city continues to face is traffic congestion, a problem that is being addressed as part of a $36 billion, 25-year regional transportation plan. Select projects have been accelerated as part of a five-year plan to mitigate traffic congestion. Projects include new HOV lanes, a light rail from Cobb County to Midtown, a commuter rail from Atlanta to Macon and a new northern perimeter connecting I-75 and I-85.

Mark Lunt, Miami 

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