Savannah Chamber

19 Generous incentives and the attainment of critical mass will ensure that Georgia's film industry makes a substantial contribution to economic growth in 2019. Georgia's film industry ranks number one globally in the production of the top grossing feature films, followed by the United Kingdom, Canada, California, Louisiana, and New York. In addition, the number of TV productions in Georgia is very impressive. Since the Georgia Entertainment Industry Investment Act was signed into law in 2008, direct spending by the film industry has increased from $93 million in 2007 to $2.7 billion in FY 2018. State incentives ensure that nearly all studio space is booked. The Georgia Film Academy will help ensure that well-trained workers are available. Georgia's diversity of locations provides a good fit for a wide range of film and TV productions. Georgia is at the stage of development where new movie and film production increasingly begets additional movie and film production. In addition, as the professional, technical, and physical infrastructure becomes even more fully developed, the economic benefits of each dollar spent on film and television production in Georgia will generate larger economic impacts for our state's economy. One possible risk to the outlook for Georgia's film industry is divisive state legislation, such as "religious liberty" or "bathroom" bills. Improving economic conditions – especially the upcycle in real estate – and improving demographic trends will help Georgia's financial institutions. Rising asset values favor banks' top- and bottom-line growth. The prospects for deposit growth also are excellent. In 2019, an almost flat – or possibly inverted – yield curve will limit financial institutions' ability to profit from borrowing short and lending long, but higher demand for most types of loans will support Georgia banks' profits, which have recently risen. Households' credit scores are at relatively high levels. Higher consumer spending for expensive durables should ensure growth of non-revolving credit to households, but banks will tighten lending for auto loans due to rising delinquencies. More major home renovation projects will cause the use of home equity loans to increase. Fewer auto loans and less mortgage refinancing will challenge the bottom line, but regulatory relief will help. Traditional banks and credit unions will see more competition from large retailers, venture capital funds, microfinance, and other nonbanks. These nontraditional competitors not as heavily regulated as traditional banks or savings and loans. Mobile banking will transform banking into a much more customer-focused business and could give advantages to technology firms or retailers that invade markets currently served by banks. For eight straight years, Georgia's leisure and hospitality industry has outperformed the overall economy. It will continue to do so in 2019, but by a lesser extent than in recent years. Both limited service properties that cater primarily to tourists and full-service properties that are popular with business travelers will post significant gains. The success of film and TV production will continue to generate spillover benefits for the state's hospitality industry. Lodging demand will rise moderately from already elevated levels. Since the lodging market is not oversupplied, the benefits to the industry from higher demand will be significant. Nonetheless, the long stretch of impressive performance has stimulated new development in many areas of the state. In 2019, the number of new hotel rooms completed will exceed demand growth. That imbalance will cause total revenue per available room to grow more slowly in 2019 than in recent years, but total revenue will continue to grow faster than GDP. In addition, modest increases in average daily room rates will add to the industry's overall profits. Off-peak rates will not increase significantly, but peak room rates at better properties will attain all-time record highs. On top of higher demand for rooms, increased utilization of many hotel services will bolster revenue per available room. Although the overall economy will grow, there are still some headwinds and downside risks for the lodging industry. The main economic risk for this consumer discretionary industry is the possibility of a recession. The main political risks include more federal entry restrictions on foreign travelers and divisive state-level legislation such as "religious liberty" or "bathroom" bills. In addition, occupancy rates in many markets are at, or near, inflection points. Occupancy rates are poised to decline slightly, especially for older properties in less than prime locations. There will be more pressure on wages and salaries than in recent years, which will exert pressure on the industry's net margins. The $5 statewide hotel/motel fee that went into effect in 2015 is also a negative factor. The talk about a $15 national minimum wage is a threat to Georgia's lodging industry, but political considerations suggest that the immediate threat is very small. In contrast, the shared economy is a major disruptor for the traditional lodging industry.

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