Savannah Chamber

17 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. Nonetheless, the long stretch of impressive performance has stimulated new development in many areas of the state. In 2018, the number of new hotel rooms completed will slightly exceed demand growth, and that imbalance means that total revenue per available room will grow more slowly in 2018 than in recent years, but 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 set all-time record highs. Coupled with higher demand for rooms, increased use 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 this consumer discretionary industry, chief of which 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 before, 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, 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. Manufacturing Due to many major project announcements by manufacturers, Georgia is recovering manufacturing jobs more rapidly than in the nation as a whole. These projects are bolstering industry growth in aircraft (e.g., Pratt & Whitney and Gulfstream), cars (e.g., Carcoustics, Sentury Tire, Kia and its associated suppliers), flooring (e.g., Mohawk Industries, Engineered Floors, Beaulieu International Group), building materials (e.g., Elixir Extrusions, Sparta Industries, EdenCrete, Caesarstone), and food processing (e.g., The Linde Group, Colorado Premium, Diana Food, Star Snacks, and Starbucks). It helps that Georgia's manufacturing industry is not geared towards oil or natural gas production, and therefore benefits from lower oil and gas prices. Looking ahead, Georgia will see substantial increases in advanced manufacturing activity and employment. Recent project announcements include Pratt & Whitney, SILON, Advanced Digital Cable, Inc., and Rinnai. In 2018, Sentury Tire will begin construction on an advanced tire manufacturing and R&D center in LaGrange that will employ over 1,000 by the time it opens in 2019. This announcement illustrates Georgia's growing economic ties with China and validates the establishment of the state's two strategic economic development offices in China, which is one of Georgia's top export markets. Cyclical economic recovery, more effective economic development policies, low domestic natural gas prices, rising wages and production costs in China and elsewhere are some of the factors behind recent and expected increases in Georgia's manufacturing activity. Concerns about product quality and management of the risks associated with increasingly complex supply chains also make manufacturing in Georgia more attractive. Additional factors that will help Georgia attract manufacturers include a superior transportation, logistics, and distribution infrastructure, low costs of doing business relative to other highly developed economies, a favorable tax structure, highly ranked colleges and universities, excellent work-force training programs, and very competitive economic development incentives.

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