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National Association of Home Builders Paying $2.7 million to
 Get Out of Contract with the Georgia World Congress Center;
 Atlanta's Largest Trade Show Cancels 2007 and 2008 Events

The Atlanta Journal-Constitution
Knight Ridder/Tribune Business News

Apr. 20, 2005 - Keeping its convention in Atlanta would have cost the National Association of Home Builders an estimated $10 million in revenue -- at least five times more than the incentive package the city was offering, a member of the group said Tuesday.

NAHB, which organizes the city's largest trade show, was scheduled to meet in Atlanta in 2007 and again in 2008, but decided on Saturday to pull out.

Its primary reason was that the city's convention center is too small. It can make more money at a convention center with more booth space, said John Cowart, a Norcross developer who has served on the NAHB's convention committee for about 15 years.

Atlanta also had the problem of spread-out hotels, Cowart said.

NAHB show attendees would have stayed in more than 125 hotels, some as far away as Marietta and Norcross.

But the home builders probably would have taken the financial hit and the lodging inconvenience to come to Atlanta if not for concern that some incentives the city offered would be raised through hotel charges, Cowart said.

"The association does not want a kickback from hotels and then add that kickback on to our members," he said.

The Atlanta Convention & Visitors Bureau, the agency that markets the city to conventions, agreed to drop any plan to have hotels contribute fees to a cash incentive that would have amounted to $650,000 for each year the convention was in town. The Georgia World Congress Center also had agreed to a $350,000-per-year discount -- creating a $2 million incentive package for both years.

ACVB President Spurgeon Richardson said as soon as the bureau became aware of the NAHB concerns about hotel rates, it decided to pay the cash incentives from other funds, perhaps even the bureau's reserves.

"We were going to find another way to do it," he said.

But in what Cowart called a "very unfortunate" e-mail, an ACVB staffer in late February sent a memo to hoteliers. The staffer asked them to stand firm on room rates during the convention. He cited the hotels' contribution to the incentives -- through a $20 "hospitality contribution" fee -- and also directed hoteliers not to talk about the e-mail.

The mention of the fee worried NAHB convention committee members, who found out about the e-mail within a day.

The ACVB, which gets nearly half its funding from Atlanta's hotel-motel tax, declined to name the employee, whom it said has since resigned from the bureau.

Now, the association will pay $2.7 million to get out from under its contract with the Georgia World Congress Center.

But Cowart said the association still will make at least an extra $7 million selling booth space to building industry suppliers when it moves its convention to a larger venue. In 2007, the home builders are expected to meet in Orlando, which has 2.1 million square feet of convention center exhibit space, compared with GWCC's 1.4 million.

The home builders may return to Orlando in 2008. Or the group may go to Las Vegas, which also boasts more than 2 million square feet of exhibit space, said Wayne Stetson, NAHB senior staff vice president.

Atlanta is stinging from the loss of the NAHB show. It would have brought in an estimated 100,000 attendees and $119 million in direct spending. The convention accounted for 9 percent of the convention business Atlanta had scheduled for 2007.

Because large shows are booked up to 10 years in advance, it will be tough to fill all the space the home builders would have occupied -- the World Congress Center, the Georgia Dome and a huge tent that would have been pitched between the two.

Would the NAHB conventions be leaving had the hotel fee issue never cropped up?

"I would say they probably would not," Cowart said.

By Matt Kempner And Leon Stafford

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To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2005, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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