Center for Economic Analysis Middle State College – School of Business

An Overview Economic Factors Related to the Demand for Accommodations in Downtown Macon.

Conducted by:

Dr. Greg George, Director Center for Economic Analysis School of Business Middle Georgia State College

June 5, 2015 Forward:

This report is extracted from a larger report being complied for MMI Capital on economic factors of Macon with particular emphasis on downtown Macon. The purpose of this report is to present an independent and unbiased description of downtown Macon.

This report serves as an assessment of the local and regional economic factors which are relevant to hotel accommodations in downtown Macon. This report is not intended as an assessment of financial viability for a hotel. Specialized reports specific to the accommodation industry are available through other sources.

This report does not necessarily reflect the opinion of the School of Business, Middle Georgia State College, nor the University System of Georgia. Any errors or omissions are the strict responsibility of the author. Additionally, any errors or questions should be addressed to Greg George at [email protected]. The assessment is based on a review of available information at the time of publication.

- 2 - Summary of Findings

- The City of Macon serves as the region’s center for population, employment, entertainment and culture.

- Macon is the largest accessible city to approximately 400,000 people in .

- The unemployment rate in the Macon MSA has fallen to 6.6% since the Great Recession, which hit the area particularly hard.

- Macon’s service economy is focused on Healthcare, Education, Financial Services and Retail.

- Over 36% of workers in Macon commute from surrounding counties.

- Macon has eleven key entertainment venues that collectively serve over 360,000 attendees every year.

- Macon hosts 11 major events and festivals every year that draw regional, national and international crowds.

- There are no hotels which serve the urban core and allow pedestrian access to the industries and venues located in the core. The downtown urban core of Macon is a focal point of several key economic industries/drivers and the geographic and transportation center of all of the economic drivers.

- Appropriate accommodations are an essential component to economic development and continued growth of the community.

- 3 - Qualifications – About the Author

As founder and director of the Center for Economic Analysis, HG Research Associates, and through private consulting under Greg George, LLC, Dr. Greg George has extensive experience in applied economic research. Additionally, Dr. George has conducted damage assessments and has generated numerous economic reports, studies and lost earnings calculations used in litigation, mediation and by government agencies in the US and Canada. Furthermore, the author has produced work for private firms, non-profit groups and the Federal Reserve Bank of . Dr. George has published peer reviewed articles in edited trade books and economic journals and has extensive litigation experience. He earned his Bachelor of Science degree from the University of North Carolina at Chapel Hill (1990), and his Masters (Resource Management, 1997) and Ph.D. (Economics, 2002) from the University of South Carolina. He has taught courses in Applied Microeconomics, Principles of Micro- and Macroeconomics, Game Theory, Managerial Economics, International Economics and Quantitative Methods/Business Statistics. His Curriculum Vitae is available as an attachment.

- 4 - I. Overview

The Center for Economic Analysis (the Center) was asked to conduct an independent and unbiased summary of current market conditions in the Macon area. The purpose of the present report is to provide the Middle Georgia community and other interested parties with accurate, timely and thorough information regarding the distribution and magnitude of events, venues, festivals and businesses that comprise the general demand for hotel accommodations. In pursuit of this task, the Center has conducted independent research, consulted with key personnel, and gathered data available to the general public from a variety of sources.

The current report presents a survey of Central Georgia’s demographics, economy, industry mix, entertainment, and venues relevant to the demand to downtown hotel accommodations in Macon. Whenever assumptions or estimates were necessary, the author erred on the side of presenting conservative results. The impacts and summary statistics reported herein should therefore be considered a baseline study to inform key decision-making personnel interested in such findings. The following section contains a brief description of Central Georgia’s demographics. Section III describes the local economic conditions, and Section IV paints a picture of the local entertainment offerings. The final section offers some concluding remarks.

The Center for Economic Analysis is housed in the School of Business at Middle Georgia State College. The mission of the Center is to provide Middle Georgia with a variety of analytical services to local businesses, non-profits, and governmental agencies. The Center strives to be a center of excellence and is the leading provider of economic, market and business research in the Middle Georgia region. We are pleased to present the current study to interested parties and feel it will serve as a valuable tool for making informed decisions going forward.

- 5 - II. Central Georgia Demographics

In order to describe and present demographic/economic characteristics in a useful manner, it is first necessary to describe the region of interest. In many cases, this is a straight forward exercise; i.e. the population of the United States, or the total economic output of the state of Montana. When considering an economic investment in Macon, GA, describing local conditions can be significantly more intricate. Macon presents a host of demographic and economic characteristics that are unique to the Central Georgia region. For example, while the population of the city of Macon is under 90,000 residents, the Macon MSA is host to over 230,000 people, many of whom consider themselves “Maconites.” Adding to the complexity, Macon and Bibb County have recently consolidated under a unified government which represents slightly more than 150,000 individuals. Consequently, Macon, despite its official size, has the feel of a substantially larger city. Furthermore, due to the relatively low population density of much of the surrounding areas (with the exception of Macon and Warner Robins), approximately 400,000 residents living within 40 miles of Macon, regard Macon as a center for shopping, entertainment and employment. For the purposes of this report, I will concentrate primarily on the Macon MSA and Macon/Bibb County designation and will take care to properly document when data pertain to the City of Macon or any of the other designations listed above.

Figure 1: Census Bureau Data for Macon/Bibb County and the Macon MSA.

- 6 - Prior to consolidation, the general trend was a shrinking population within Macon city limits and slight growth in the surrounding unincorporated county areas. Consolidation may have caused a small decrease in the overall Bibb County population, but this trend has slowed and, according to the US Census Bureau, is expected to reverse over the next 10 years (see Figure 1 above).

- 7 - III. The Local Economy

Unemployment

The state of Georgia was hit particularly hard by the 2008-2009 recession. Overinvestment in the real estate sector and a dependence on numerous failed community banks created a deep and prolonged economic contraction with unemployment rates well above the national average. Through 2013, the local economy languished, but started to turn around early in 2014. Today, the unemployment rate for the Macon MSA has fallen to 6.6% from 7.9%, where it sat in March of 2014. The following figure shows the most recent county by county unemployment rates in Georgia.

- 8 - Industry Mix

Table 1 shows the number of establishments, employees and wages for the different industries currently located in the Macon MSA. By far, the largest sector by employees is Healthcare and Social Assistance, followed by Retail Trade, Accommodation and Food Service, Education Services, and Finance and Insurance.

Table 1: 2014 Industry Mix Sector Establishments Employees Total Wages Average Weekly Wage Total, All Industries 5,682 95,869 $3,675,466,956 $737 Accommodation and 482 8,802 $120,588,490 $263 Food Services Administrative and 302 5,739 $138,094,066 $462 Support and Waste Management Agriculture, Forestry, 54 493 $17,126,844 $677 Fishing and Hunting Arts, Entertainment, 56 628 $12,331,632 $377 and Recreation Construction 429 2,965 $121,219,568 $784 Educational Services 167 8,689 $330,605,401 $731 Finance and 343 7,712 $368,541,778 $919 Insurance Health Care and 671 17,346 $816,821,693 $903 Social Assistance Information 82 1,311 $66,737,808 $983 Management of 44 2,272 $159,560,218 $1,350 Companies and Enterprises Manufacturing 179 5,442 $281,235,388 $993 Mining, Quarrying, 9 404 $25,923,826 $1,235 and Oil and Gas Extraction Other Services 501 1,948 $61,147,837 $603 (except Public Administration) Professional, 485 3,335 $195,084,312 $1,124 Scientific, and Technical Services Public Administration 101 6,363 $237,840,410 $718 Real Estate and 223 1,431 $52,954,273 $711 Rental and Leasing Retail Trade 949 13,889 $321,224,118 $445 Transportation and 171 3,386 $135,705,207 $770 Warehousing

- 9 - Wholesale Trade 260 2,790 $139,575,156 $961

While it is instructive to describe the current industry mix, it is more helpful to look at changes over time. Table 2 below shows the previous five-year trend in establishments, employees and wages by industry sector.

Table 2: Changes in Industry Mix Over the Previous Five Years. Difference 2010-2014 Sector Establishment Employee Total Wages Average Weekly s s Wage Total, All Industries -19 5,445 $422,321,350 $45 Accommodation and Food 19 957 $14,498,023 $3 Services Administrative and Support 3 -22 $8,534,545 $30 and Waste Management Agriculture, Forestry, -7 39 $375,993 -$33 Fishing and Hunting Arts, Entertainment, and 4 81 $1,414,592 -$7 Recreation Construction -38 -352 -$9,687,635 $25 Educational Services 14 -97 $5,775,552 $20 Finance and Insurance -19 1,004 $62,512,166 $42 Health Care and Social 36 454 $72,567,769 $56 Assistance Information -3 -45 $6,719,442 $132 Management of Companies 0 353 $66,089,340 $413 and Enterprises Manufacturing -7 31 $14,387,254 $45 Mining, Quarrying, and Oil 1 13 $1,966,615 $56 and Gas Extraction Other Services (except 4 -9 $4,512,534 $46 Public Administration) Professional, Scientific, and -14 542 $51,740,884 $137 Technical Services Public Administration -1 401 $28,783,412 $44 Real Estate and Rental and 0 283 $16,041,137 $93 Leasing Retail Trade 11 1,838 $42,189,744 $0 Transportation and -1 159 $11,350,013 $29 Warehousing Wholesale Trade -1 -245 $5,991,194 $115

Whereas the total number of establishments is down slightly over the past five years, the numbers of employees, total wages and average wages have increased substantially since 2010. The hardest hit industry over the past five years was Construction, although this trend

- 10 - should reverse as the economy continues to improve. Educational Services has been somewhat of a mixed story. While more educational establishments exist today than did five years ago, the number of employees has decreased slightly. Reductions in state and Federal education budgets at the K-12 level are one reason for this. However, the general trend for higher education in the region has been steady growth. Large investments in athletics, consolidation of public institutions, and the upcoming transition to university status of Middle Georgia State College will likely continue this trend.

Another noticeable long run trend in Central Georgia has been a transition out of manufacturing and into the service industries. Houston County has developed into a hub for the aerospace industry in support of Robins Air Force Base. The remaining manufacturing base has evolved into high-tech niches with companies such as Boeing, LH Thompson, and Triumph Aerostructural, as well as a host of service facilities including Bombardier in Bibb County.

Largest Employers in Middle Georgia

Table 3 shows the top 20 employers in Middle Georgia and their proximity to downtown Macon.

Table 3: Top 20 Employers by Number of Employees - Sorted by Proximity to Downtown Macon Employer Number Miles Bibb County Board of Education 3,700 0 Macon-Bibb County government 1,900 0 Bibb County government 780 0 Medical Center, Navicent Health 6,000 0.5 United States Postal Service 600 0.6 Coliseum Health System 1,400 1.4 Mercer University 900 1.5 Academy Sports + Outdoors distribution center 700 3.5 YKK (USA) 600 5.9 Geico 5,600 6 Wal-Mart stores (Bibb County) 740 6.1 Ricoh USA 575 7.1 Georgia Farm Bureau, Oconee Regional Medical Center 525 10.3 Houston County government 626 13.2

- 11 - Houston Healthcare 2,449 18.4 Robins Air Force Base 23,500 19.4 Monroe County Board of Education 612 23.7 Blue Bird Corp. 1,500 26.7 Frito-Lay 1,338 29.7 Baldwin County Board of Education 830 29.9 Commuting

Table 4 below contains the number of daily commuters into Bibb County from the surrounding counties. Houston and Jones counties are the largest source counties for commuters, but it is important to note the large number of commuters from outside of the closest surrounding counties (5,426 workers, or 6.4% of the employed labor force).

Table 4: Net Inflow of Daily Commuters into Bibb County (Based on 84,921 Employed) County Average Commuters Percent of Employed Distance Houston 32.9 8570 10.1 Jones 25.2 5988 7.1 Monroe 19.8 3262 3.8 Peach 19.9 2361 2.8 Crawford 21.7 2360 2.8 Baldwin 35.0 900 1.1 Twiggs 30.9 1929 2.3 Other >35.0 5426 6.4 Total N/A 30,796 36.3%

- 12 - IV. Entertainment and Venues

Not only does Macon serve as the population, employment, and economic center for Central Georgia, it also serves as the cultural and entertainment focus for area residents. In addition to the Coliseum and Convention Center’s numerous events (up to 1000 per year), a variety of venues play host to events and festivals throughout the year. The table on the next page contains venues and the number of yearly events each hosted in 2013-2014. Following are a list of the major annual festivals and events. Some attendance figures and economic impacts are reported, however, there is limited available information for most of the festivals.

- Cherry Blossom Festival – Macon’s premier annual festival which hosted 230,000 attendees in 2015, and generated more than $19,000,000 in economic impact.

- Ocmulgee Indian Celebration – An annual event at the Ocmulgee National Monument which attracts vendors and participants from across the nation.

- Bragg Jam – Macon’s largest music festival is projected to attract 5,100 attendees, 90 bands and generate 200+ room nights this year. Economic Impact of Concert Crawl is estimated to be $725,280. In 2014, the event attracted 4,200 attendees, 56 bands, and generated 100+ room nights. The Concert Crawl generated $581,100 last year.

Other annual festivals and regular events in Macon include:

Pan African Festival Macon Film Festival Hay House Spring Stroll Mulberry Street Art Festival One City Art Festival Spring Spirit Stroll Fired Works Regional Ceramics Exhibition and Sale Mercer Athletics (Men’s Football and Basketball)

- 13 - Macon is home to multiple venues that consistently attract events and acts from across the country. The following page contains data about the event venues in Macon.

- 14 - Table 4: Venues 2013-2014

Distance From Maximum Average 2013-2014 Average Per Venues Hotel Unit Type When Occupancy Attendance Events Year Attendees Grand Opera House 0.5 miles Performance Year Round 1,030 800 26 26 20,800 Cannonball House 0.5 miles Private Event/Function Year Round 75 50 50 25 1,250 Hay House 0.5 miles Private Event/Function Year Round 100 50 10 5 250 Crazy Bull* 1.2 miles Performance Year Round 1,105 800 292 146 116,800 Coliseum 1.3 miles Sports/Convention/Conference Year Round 25,000 200 2,000 1,000 200,000 Blacksmith Shop 200 feet Wedding/Private Event Year Round 250 175 100 50 8,750 Armory Ballroom 300 feet Wedding/Private Event Year Round 300 200 124 62 12,400 City Auditorium 437 feet Convention/Conference/Prom Year Round 2,688 500 41 21 10,250 Cox Capital Theater 1056 feet Performance Year Round 650 350 58 29 10,150 Sidney Lanier Cottage 1500 feet Private Event/Function Year Round 50 25 50 20 500 Library Ballroom 1584 feet Wedding/Private Event Year Round 250 150 100 50 7,500 Total 31,498 Total: 367,850 V. Existing Hospitality/Accommodation Industry

At the current time, the hospitality industry is located in four geographic locations in Macon.

1. Macon North – Targeting primarily transient customers utilizing Interstates 75 and 16, there is a large stock of older hotels located around and between Tom Hill, Sr. Boulevard, Arkright and Bass Roads. Though there have been some more recent hotels built, the bulk of the accommodations are aging and the area lacks the economic underpinnings for continued growth. Visual evidence of deferred maintenance, as well as weak economic performance can be seen in the attached STR reports. These hotels are 7 to 9 expressway miles from downtown Macon and do not serve or benefit from the revitalization of downtown Macon.

2. – Serving almost exclusively interstate travelers, this area has numerous hotels. There are a large number of hotels which have been converted to weekly rentals, as well as some newer hotels serving travelers. However the distance from downtown makes them unattractive for downtown visitors.

3. Mercer – Among the newest of the hotels in Macon, and serving primarily Mercer University, the existing hotel has been successful enough to attract another, which is to be built in 2015-2016. However, the hotels are located on the south side of the campus and are geographically isolated from downtown. Downtown visitors, and particularly those unacquainted with the area will find the hotels difficult to get to and unattractive for those working or visiting downtown venues.

4. Downtown – At this time there are no downtown hotels. A large full service, national brand hotel was constructed near the Convention Center in 2007. However, this hotel is focused on the Convention traffic and is geographically isolated from the downtown core by . The difficulty in walking to the hotel severely limits its attractiveness as an accommodation for those working or attending downtown functions. The 1842 Inn has been a landmark in downtown for many years, but its small size and location outside the commercial areas limit its utility to those seeking accommodations downtown.

- 17 - VI. Concluding Remarks

Based on a review of available data, the Center for Economic Analysis synthesized relevant information and presented it in a useable format for decision-makers and key stake-holders.

Macon is the economic epicentre of middle Georgia and serves as the focus for work, recreation, shopping, healthcare, education and entertainment to over 400,000 residents in the region. Currently, the concentration of hotel accommodations are limited to the perimeter of the city, with an obvious lack of rooms serving the downtown core.

It is my professional opinion that based on the general demographic, economic, professional and entertainment characteristics of Macon, there exists a significant shortage of downtown accommodations. Furthermore, it is evident that a downtown hotel is essential for continued revitalization of the downtown.

Respectfully submitted on May 15, 2015 by:

Greg George, Ph.D. in Economics Associate Professor of Economics, and Director of the Center for Economic Analysis School of Business, Middle Georgia State College 100 College Station Drive Macon, GA 31206 Email: [email protected] Voice: (478)731-7134

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