World Congress Center grapples with rising deficits

Georgia World Congress Center officials are turning off lights, cutting off the air conditioning and silencing the murmur of escalators this summer in an effort to save money.

The nation’s fourth-largest convention facility is taking drastic measures to prepare for one of its largest deficits ever — a projected $5.64 million loss in fiscal 2010, which begins July 1. That will follow a projected $1.4 million deficit for the year coming to an end this month.

“We will be a lot more frugal with electricity when parts of the buildings are not in use,” GWCC spokesman Mark Geiger said.

The sprawling downtown complex, usually the scene of hustle and bustle from people hailing from all around the world, has seen convention traffic slow and revenue dry up during the prolonged recession. Its slowdown ripples across metro Atlanta’s $11.4 billion hospitality business, which includes everything from hotels and restaurants to tourist attractions.

The industry is already struggling because of a drop in business travelers. The loss of conventioneers will further erode hotel occupancy, pluck more diners from restaurants and lower the outlook for taxi fares from Hartsfield-Jackson International Airport to downtown.

“When a city bets real big on conventions and tourism, it’s like riding a wave,” said Heywood Sanders, a professor at the University of Texas-San Antonio and frequent critic of convention center overbuilding. “When the economy is good business is there, but when it’s bad it’s real obvious.”

The state-run GWCC lost money in back-to-back years during the travel downturn that followed 9/11. But the projected 2010 deficit would be the largest of the decade.

The GWCC makes money in various ways, including by selling parking, food and beverages and renting space for banquets, exhibit booths and rooms for convention meetings.

To cut costs, the GWCC has quashed merit raises and frozen 60 vacant positions.

It’s also putting $1 million in projects — including a $400,000 upgrade of the sound system for Building A and $300,000 in exterior closed circuit security cameras — on hold, Geiger said.

To be sure, the GWCC on many days still teems with conventioneers. But many conventions or trade shows don’t draw the traffic they used to, and smaller meetings that usually fill in the gaps have dried up.

Big conventions like Duluth-based Primerica Financial Services, one of the center’s largest, canceled a meeting this month that had been expected to draw about 40,000 attendees. It was worth about $55 million to the GWCC and the city.

Overall, convention attendance was down this year about 15 percent to 20 percent, industry observers said.

Projected revenue in fiscal 2010 will be about $28.3 million, down from about $33 million in 2009. Expenditures will total $34 million in fiscal 2010, about the same as the current year wrapping up.

Cost-cutting is an effort to make up the budget shortfall, Geiger said. The convention center has about $1.2 million in reserves. In the worst case scenario, GWCC officials said they could go to the General Assembly if they can’t cover the budget shortfall.

Officials with the Atlanta Convention and Visitors Bureau, said there is reason for hope.

The group, which helps bring conventions to Atlanta, said calendar year 2010 is strong. The organization has booked 19 conventions that have blocked 5,000 rooms or more on peak nights, the biggest room blockage in the city’s history, said Bureau president William Pate.

Those conventions — which include International Poultry Expo and Hinman Dental — are expected to book 220,000 more rooms than were booked in 2009.

“The pace is picking up,” he said, pointing out that the GWCC anticipates a good fiscal 2011. “We have seen an uptick in site visits. The challenge is getting to the last phase where you get a signed commitment. We’re confident we’ll get over the goal line.”