BusinessTN

Following the recent boom in hotel and convention center development across Tennessee, a flattening has occurred in the market similar to the period following the 9/11 terrorist attacks. Convention bookings are expected to remain consistent this year, but the hospitality and tourism industries will suffer the impact of personal and corporate cut-backs. In the midst of an economic recession, can Tennessee markets maintain business until growth returns?

A survey of industry leaders reveals subdued expectations and cautious optimism.

NASHVILLE

Nashville's hotel occupancy fell 5% since last year, reaching a mere 51.1% in December 2008, according to the Nashville Convention and Visitors Bureau. This drop is reminiscent of not only the aftermath of the 9/11 terror attacks, but also of the closing of the Opryland Theme Park in 1997. Nonetheless, the Nashville Convention Center has had consistent booking rates since 2008, operating at full capacity. Last year, the city announced plans to construct a new center boasting 370,000 square feet of exhibition space and 60 meeting rooms. Though the center was originally expected to be completed in 2011, Executive Director Charles Starks says the plans are in the architectural design stage, with ground-breaking anticipated for late summer or early fall of 2009 and completion expected by late 2012.

Meanwhile, Nashville's Gaylord Opryland Resort and Convention Center has once again postponed its decision on a $400 million expansion plan, originally projected to break ground in late 2008. This investment would involve doubling the size of the convention center and adding a 400-suite wing, totaling 3,281 rooms and more than one million square feet of meeting space. The all-inclusive luxury resort recently spent three years completing a $125 million project that included the renovation of 2,297 rooms, as well as the addition of the Rel‰che Spa, an indoor pool, a fitness center and new dining and entertainment options marketed toward younger patrons. Despite such efforts, however, CEO Colin Reed and CFO David Kloeppel still predict revenue per available room to drop 12% in 2009.

MURFREESBORO

To compete with Tennessee's major markets, Murfreesboro invested in the "Gateway Project," a 400-acre development of retail, office, hotel, convention and public spaces. This project includes The Avenue Murfreesboro, an open-air shopping pavilion of nearly 110 retail shops and restaurants completed in 2007, and the Embassy Suites Murfreesboro Hotel & Conference Center, which boasts the third largest ballroom in the state following Gaylord Opryland's Delta and Presidential Ballrooms. Becky Vealey, director of sales and marketing for the Embassy Suites, describes the hotel's relationship with The Avenue Murfreesboro as "symbiotic" when it comes to their convention business and overall growth and revenue. "Without The Avenue Murfreesboro, we would not be able to attract groups here," Vealey says. Since opening in September 2008, Embassy Suites has met expectations with consistent booking rates of about 250 events in 2008 and 2009, although the average number of attendees has decreased this year.

CLARKSVILLE

Murfreesboro's activity has not gone without notice, or imitation. Clarksville Mayor Johnny Piper has proposed constructing a privately owned and operated hotel and conference center on city-donated land, modeled after the Embassy Suites Murfreesboro Hotel & Conference Center. Piper says Clarksville can replicate Murfreesboro's success by using a private company, as both locations rejected the idea of a city-built hotel and conference center. Officials are currently soliciting bids for the project.

CHATTANOOGA

With 312,000 square feet of meeting space, the Chattanooga Convention Center is a regional leader in "green initiatives" and one of the first convention centers in North America to use day lighting on such a large scale. Executive Director Tom Riddle sees the benefits of its convenient downtown location, which places guests within walking distance of several hotels, restaurants, shops and major attractions, such as the Tennessee Chattanooga Aquarium. "Our bookings do not reflect increases for the calendar year of 2009, but neither do they reflect decreases," Riddle says. "They are relatively flat at a 2% increase in January and February over last year."

Located adjacent to the Chattanooga Convention Center and hosting groups from five to 500 people, the Chattanoogan Hotel reported a record-setting fiscal year 2008 in terms of hotel occupancy and conference bookings. The last two quarters, however, have been weaker, a fact that comes as no surprise to Chattanoogan GM Tom Cupo. "Meetings and conferences are often the first to get cut and the first to come back," Cupo says. Like many business leaders in the area, Cupo anticipates that the $1 billion Volkswagen plant set to open in 2011 will help his industry regain strength sooner rather than later.

SEVIER COUNTY

After entering the Tennessee arms race for resort hotels and convention space, the Great Smoky Mountains region of Sevierville, Gatlinburg and Pigeon Forge has been working to achieve recognition as an upscale destination for corporate retreats. The Sevierville Events Center at Bridgemont is designed to hold large trade shows and expositions. "The booking rate has increased slightly each year since the facility's opening in 2007," says Mike Wilds, director of development, marketing and sales. Wilds points to a 14% increase from 36 events in 2008 to 41 events in 2009.

Adjoining the Sevierville Events Center at Bridgemont is the 240-room Stone Hill Lodge, which is part of the Wilderness at the Smokies resort, a family-oriented resort and adventure water park. River Lodge, also part of the Wilderness resort, offers 400 multi-room suites capable of accommodating up to 15 guests.

KINGSPORT

Kingsport's MeadowView Marriott Conference Resort and Convention Center is still on track for the August completion of a $15 million project, says marketing and e-commerce manager Elizabeth Contiliano. This project involves the addition of two 55-room towers, an indoor pool and fitness center, and the renovation of the existing 195 rooms. Contiliano says a new 22,000-square-foot conference center overlooking Cattails golf course should be completed by early 2010. The facility will include two amphitheaters, a 5,000-square-foot ballroom, meeting rooms and a three-story parking garage.

KNOXVILLE

Kim Paul, senior vice president of sales and marketing at the Knoxville Tourism and Sports Corporation, says this year's buzz phrase for the convention industry is, "If you are flat, you are up." But with future meetings becoming larger in scale and scheduling into 2013, "any losses experienced now are being balanced by the addition of short-term business opportunities," Paul says. One of the biggest trends for attracting these short-term deals is the use of social media such as Facebook, Twitter and Flickr. "The more non-conventional ways to reach the market are the best right now because people prefer the laid-back, short approach that social media provides,"
Paul says.

MEMPHIS

Construction projects have helped business for the Memphis Cook Convention Center, which invested $100 million to expand into 300,000 square feet of meeting space and open the Cannon Center of Performing Arts. Since the center's completion in 2003, the number of events booked annually has tripled from an average of 12 to the current 36, and total revenue has nearly doubled. GM Pierre Landaiche says 12 events are scheduled for the first quarter and a predicted 100,000 room nights booked will make 2009 a record-breaking year, although some consumer shows and corporate meetings have canceled and many will host smaller attendees or exhibitors.

Furthermore, the Memphis Convention & Visitors Bureau estimates a strong year due to major bookings, such as the National Baptist Convention in September, and the Urban Network Music Entertainment & Marketing Summit in June. And there are expansion plans in the works. "We are currently engaging consultants about a possible expansion or construction of a new facility," Landaiche says. The chosen consultants will negotiate a contract in April and begin a financial analysis of the project on November 1.