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Savannah, Georgia Selects Journeyman Austin Holdings LLC
 as the Developer for a Convention Center Hotel

By Arlinda Smith Broady, Savannah Morning News, Ga.McClatchy-Tribune Regional News

October 14, 2010 --Although it seems the plans to put another convention-sized hotel, tourist attractions and a privately owned boat slip on Hutchinson Island have moved at glacial speed, the projects have picked up momentum lately.

The Georgia International and Maritime Trade Center Authority picked Journeyman Austin Holdings LLC as the developer of a convention center hotel on the island during its October meeting Wednesday.

"It was a coin toss as far as quality and access to capital," said Patrick Shay, head of the steering committee that evaluated companies interested in the project.

In his recommendation, Shay pointed out the reasons for the development.

"After the trade center opened, we immediately experienced the aftermath of 9-11, so the momentum for expansion and development was lost for a time," he said in a memo to board members. "Although we were able to keep the promise made to SPLOST referendum voters to manage the convention center without any additional subsidy, we knew we could do better."

Subsequently, a master plan for the piece of land known as Parcel 7 was implemented several years ago. Professional market studies supported expansion, and this year the trade center authority decided to test whether the private sector was interested in coming on board.

The vote consisted of five parts:

-- Accept Journeyman Austin's proposal for further vetting, evaluation and negotiation of a proposed development agreement for the Savannah Convention Center Hotel.

-- Impose a 150-day time limit to negotiate and present a final agreement for consideration.

-- Solicit and hire a firm to investigate the economic impact of not developing the proposed convention center hotel.

One question concerns what the cost would be of not having the hotel in terms of lost jobs and related product and service sales.

A second question is about the wider impact not having the hotel would have on attracting current and even larger trade shows.

-- Solicit and hire a firm to estimate the effects on the Savannah convention market if an appropriate market-based rooms agreement had existed from 2004 through 2010.

-- Authorize the steering committee to contact Journeyman Austin's proposed capital partners and relevant other parties to evaluate and verify financial/capital aspects of the firm's proposal.

HVS Consulting & Valuation was hired earlier to study the market and found the Savannah market registered consistent hotel occupancy levels of 75 percent to 77 percent in 2004 through 2007.

Starting in 2008, Savannah saw declines to as much as 68 percent, but given the increase in supply and the economic recession, HSV contended the market was still strong.

It anticipated the market will return to pre-recession levels by 2013, when the proposed convention center hotel would open.

Board members took this as a good sign they're moving in the right direction, but board chair Mark Smith urged caution when looking at finance options.

"The hotel next door was built with private funds as was every other hotel across the river," he said. "This vote is nothing more than to select a partner for the finished product."

Smith added he's optimistic the project will happen, whether it's in 2013, 2017 or 2022.

To that end, the board will conduct a series of meetings Nov. 11 through 13 for stakeholders to get up to speed on all the details.

"It will be a great opportunity to give perspective to the vision and ask tough questions," Shay said.

The meetings will have three main focuses: financial, design and marketing.

"We'll work individually and come together so all players can talk to each other," he said. "And the goal isn't a done deal, it's a better idea."

-----

To see more of The Savannah Morning News or to subscribe to the newspaper, go to http://www.savannahnow.com.

Copyright (c) 2010, Savannah Morning News, Ga.

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