GWCC struggles in convention palace overload

2010: 1,098,328

2009: 1,132,956

2008: 1,312,453

2007: 1,570,639

2006: 1,380,617

2005: 1.052,040

2004: 1,170,786

2003: 1,176,925

2002: 1,007,249

Source: Georgia World Congress Center Authority annual reports

*Centennial Olympic Park was removed from annual attendance count

Ranking as the nation’s fourth largest convention center is a matter of civic pride, at least until you have to fill its various halls and trade show floors every year.

Like most meetings palaces around the nation — and at a hefty 3.9 million square feet, palace is an appropriate appellation — having enough business to make ends meet has been challenging for the Georgia World Congress Center.

Despite offering incentives to remain competitive, including free rent in some cases, which is quickly becoming an industry standard, the downtown convention behemoth has struggled over the past few years to stay above water as meeting space nationally has outstripped demand.

The number of people attending conventions at the GWCC in fiscal 2012, for instance, was at its lowest level in a decade, though convention center officials said that had to do more with removing Centennial Olympic Park visitation from the facility’s official count.

To address the changing the landscape, the facility, which has frozen jobs and shut down Building C in the past to cut costs, is luring movie producers and has leased part of its building for the next decade to an education project.

How the GWCC fairs impacts the entire city, determining whether auxiliary businesses, such restaurants, hotels, cabs and laundry services, can survive, especially downtown.

One reason Atlanta has more hotel rooms than just about any other city, save for a few competitors such as Las Vegas and Orlando, is because conventions flocked here.

As a right-to-work state, Atlanta benefits from lower labor costs. And with MARTA, the ease of commuting from Hartsfield-Jackson International Airport has improved destination appeal to help lure conventioneers.

But now, making a profit is a hit-and-miss proposition.

In fiscal 2012, which began July 1, 2011 and ended last June 30, the GWCC eked out a net operating profit of $740,890, according to its recently released annual report. The facility ended the previous fiscal year with about $3 million in profit but ended 2010 $74,151 in the red. In 2009, the facility managed almost $294,000 in profit.

Such uneven performance has come at the same time the GWCC has offered more freebies to keep up with the pack.

For instance, James Rooney, executive director of the Massachusetts Convention Center Authority, told the Wall Street Journal late last year that Boston was close to closing a deal to bring a green building show, U.S. Green Build, to the city in 2019, but was undercut by Atlanta, which offered a free rent incentive.

Atlanta leaders declined to address Rooney’s claim in the Journal story, but the suggestion of the financial move indicates just how tough it is to secure business today.

To be fair, the center’s recent challenges track those of the economy. When it nosedived in 2008, big meetings were one of the first business expenses to be cut. That meant fewer people showed up for conventions. Parking, food and beverage revenue dropped. Exhibitors, which deliver the bulk of a convention center’s income, dwindled.

Mark Vaughan, executive vice president and chief sales officer for the Atlanta Convention and Visitors Bureau, said that at the bottom of the recession, the convention industry attendance dropped 20 percent to 25 percent, depending on the industry.

Jennifer LeMaster, the GWCC’s spokeswoman, said attendance fell in fiscal 2012 because, in part, the state-run organization stopped counting visitors to nearby Centennial Olympic Park in its overall annual tally. Because the park only has one ticketed event in which attendance can be accurately counted, leaders felt it would be difficult to defend past attendance methods that used averages to measure foot traffic.

However, she said the improving numbers at the city’s hotels, much of whose business comes from the GWCC, demonstrates the convention business is rebounding.

In 2012, hotel occupancy year-over-year was up 5 percent while hotel-motel tax collections increased 11.8 percent, said Gregory Pierce, an executive vice president, chief financial officer and chief administrative officer for the ACVB.

Still, Heywood Sanders, a critic of the industry, cautions those expecting things to get better. The business model for convention centers is broken because no one wants to be outdone in what has become a bloated convention center landscape, he said. Municipalities still believe in the “If you build, they will come” cliche.

“The dynamic is not very good,” said Sanders, a professor at the University of Texas at San Antonio.

Simultaneously, conventions have been getting smaller as budgets tightened and technological advances that made it easier to communicate without hopping on a plane.

Associations began merging or hosting meetings together, especially those with similar missions or clientele. With constrained budgets, conventioneers were forced to choose one meeting over another instead of attending all that piqued their interest as they did in the past.

By merging gatherings or holding two meetings of similar interest at the same time and place, convention planners were able to optimize attendance and revenue.

“That works on the attendee side and the exhibitor side,” said Charles Olentine, executive vice president for the Atlanta-based U.S. Poultry and Egg Association. The group reported record attendance of 26,393 at its annual meeting earlier this year at the GWCC. Part of that was the result of integrating its show with the American Meat Institute for the first time this past January. (Poultry had integrated a show with the American Food Industry Association in 2007).

But such moves have further eliminated the need for space, adding to the industry’s troubles.

That issue is being addressed. After attendance hit bottom in the depths of the recession, Vaughan said it became apparent that cities would have to step up their game to attract conventions.

“What that forced us to do was to look at our structure and to deal with our customer differently,” he said.

For the ACVB, that meant helping to create micro-sites for the conventions and specifically targeting what Atlanta can offer their industries, Vaughan said. The organization begins work with the group a year in advance, while the previous meeting is still fresh in participants’ minds.

The GWCC changed too. In January, Junior Achievement of Georgia broke ground on a financial literacy and career readiness center that will take up several thousand feet of floor space in the C building. The space will bring in $400,000 annually in rent over 10 years. The GWCC will also receive $50,000 annually in a separate advertising agreement involving the space.

The building also has become a location for movie studios. Most recently scenes from the Hunger Games and Tyler Perry’s “Madea’s Witness Protection” were shot there.