Double Time: Salt Palace Races the Clock

By Heidi Genoist -- Tradeshow Week, 2/28/2005

With its largest client driving a major expansion and renovation that — if all goes as planned — will take only 25 months from conception to grand opening, Salt Palace Convention Center in Salt Lake City is poised to rewrite the rulebook on convention center construction.

Industry observers have frequently criticized the "build it and they will come" attitude cities take toward convention centers. Just last month, University of Texas at San Antonio professor Heywood Sanders came out with a report accusing cities of putting the cart before the horse in the supply and demand of convention space.

People at work on many expansion projects would probably argue that they're exceptions to Sanders' blanket statements. But Salt Lake actually has proof that it's an exception.

Utah's biggest tradeshow venue, Salt Palace currently has 365,000 square feet of exhibit space. The venue's largest tradeshows are Outdoor Retailer Summer Market and Outdoor Retailer Winter Market, owned by VNU Expositions and operated by the company's Outdoor Retailer division. The summer market, the larger of the two, last August drew 7,694 attendees to 863 exhibiting companies in 334,747 net sq. ft. of exhibit space — a far cry from the 65 percent that most show organizers cite as a comfortable ratio of a facility's total available space to a show's net exhibit space.

OR exhibits fill every conceivable inch of space in Salt Palace's lobbies, ballrooms, meeting rooms — even hallways. What's worse, OR has a long list of existing exhibitors that want to expand their presence, and new companies that want to get into the show.

"Believe it or not, we've had people ask if they can put exhibits in the bathrooms," said Mark White, vice president of convention sales and marketing for the Salt Lake Convention & Visitors Bureau. "The outdoor market just continues to grow. (OR is) losing money without the expansion."

That's why, in the last quarter of 2003, organizers began looking for another venue. During their search, cities everywhere from Denver to Orlando were considered.

But OR, and members of its sponsoring organization, the Outdoor Industry Assn., like Salt Lake City. For one thing, with its nearby lake, mountains, ski slopes and hiking trails, the area lends itself easily to the hands-on demonstrations that are a key part of both the summer and winter shows.

For another, the state of Utah has shown a willingness to cooperate with the OIA on environmental issues it holds dear. In 2003, then-Gov. Mike Leavitt (now U.S. Department of Health and Human Services secretary) worked with the association on a measure to protect six million acres of public land, much of it used for outdoor recreation.

Finally, when OR and the OIA polled 6,000 industry members in May of last year to find out where they wanted the show to be held, a majority said they liked Salt Lake.

The feeling is mutual.

The University of Utah's Bureau of Economic and Business Research, based in Salt Lake City, each year for a decade has surveyed the city's 10 largest conventions and exhibitions. According to its data, visitors in town for OR spend around $33 million a year. And, White emphasized, that doesn't include what comes back to the city, county and state in the form of hotel room taxes.

Those numbers would increase if the show stayed in Salt Lake and were allowed to grow into new space at the convention center.

While researching what might happen if OR left, White looked at some other groups that could fill the empty slots. He found they probably wouldn't generate the same economic impact. OR brings to Salt Lake large numbers of people who like to eat well on their expense accounts, and — more importantly — spend time at resorts.

"We discovered that 25 percent make definite plans to return for vacation with 2.2 other people," White noted. "So there's a tourism interest as well."

That's why local hotel and restaurant owners, for whom OR is a twice-yearly boon, support the expansion. When officials from the county government (which owns Salt Palace), the SLCVB (which markets it) and SMG (which manages it) took their expansion plans to the community and their boards of directors, it was an easy sell.

For the most part.

At public hearings conducted during the planning process, the Japanese Church of Christ raised concerns about the back end of the convention center coming right up to the church's property.

From the 1920s through the 1960s, the block shared by the church and Salt Palace was the center of the Japan Town district. Filled with shops and restaurants owned by Japanese people, Japan Town disappeared around the time Salt Palace was built in 1967.

Proponents of the expansion, including Allyson Jackson, SMG general manager of Salt Palace, have met weekly with the Japanese community to work on a compromise.

"We have taken the opportunity to include in our design some architectural elements they wanted," Jackson explained. "Our loading dock gates will be created by an artist incorporating Japanese designs. And we're building a pocket park, with traditional plants and blooming cherry trees that incorporate their culture."

But the issue goes beyond aesthetic improvements for the Japanese Community Preservation Committee, which wants to hang onto the Japanese Church of Christ and the Buddhist Church across the street from Salt Palace — the last two vestiges of Japan Town.

Jani Iwamoto, an attorney and vice president of the JCPC, said the group has been working with the city and county mayors in hopes of moving the two churches to another side of the block that they can call their own, and, eventually, developing an ethnic corridor.

Although it understands the good business sense of the expansion, the JCPC feels the churches are equally valuable.

"We have been good neighbors all these years," said Iwamoto. "Outdoor Retailer is only here for six weeks out of the year. We have two churches that are here all year, and they're the only places left where we can gather."

Despite the resistance, Salt Lake presented an acceptable proposal to OR for expanding Salt Palace and keeping the show there. But when the show announced last August it would stay put for five more years, Salt Lake had ahead of it, as its end of the bargain, possibly the fastest timeline in convention center expansion history.

Right away, the county hired Ken Ament, who had overseen all four of Salt Palace's past expansions, to manage the design-build process. By Dec. 1, building permits were obtained, plans approved and construction begun.

By July, just one year after OR's announcement that it would stay in Salt Lake, the team will have to finish Phase I, which includes an underground parking garage and, above it, a 145,000 sq. ft. concrete surface where OR in August plans to locate 100,000 sq. ft. of exhibits.

Then, the day after move-out, the team will begin work on Phase II, consisting of three permanent exhibit halls on the 145,000 sq. ft. slab above the parking garage; and the addition of 72,000 sq. ft. of meeting space, part of which will come from a renovation of the existing North Lobby and surrounding meeting rooms.

This phase must be completed by July 2006 — 25 months after Salt Lake submitted its initial proposal to OR.

"I really believe we'll make it," Jackson said, adding, "It's incredible, though. The funding alone for most projects can take that amount of time."

In fact, the funding was the only thing still up in the air at press time. Because of the way phases I and II are divided, and the compressed construction schedule, Salt Lake County funded the first part itself with a $15 million bond issue.

The second part, however, will require another $40 million, and some of that will have to come from the state. On Feb. 16, the county submitted to the Utah Legislature its funding proposal, including a 1.5-percent increase in hotel room taxes. The legislative session ends March 1, and at press time no decision had been reached.

"There's a lot of positioning on this bill," Jackson said. "The facility is county-owned, but it sits in Salt Lake City, which has the majority of the hotels and restaurants (that generate sales and transient taxes). But the state is the No. 1 benefactor of the room tax, the city No. 2 and the county No. 3."

White said the CVB had been traveling around the state to educate political leaders on the importance of the project. On Feb. 2, Salt Palace hosted a group of legislators for a tour of OR, to show them just how desperately more space was needed for the show.

If the bill isn't addressed in this session, the county could request a special session to deal only with this issue. Or, the funding could be restructured to see how the county could carry more of the burden until an agreement is reached.

The goal is to keep the cement trucks and cranes going, but so much depends on the funding.

For example, millions of dollars' worth of steel for the framework of the exhibit halls to be built in Phase II will take about five months to be fabricated and delivered. For construction to stay on schedule, it will have to be ordered by mid-March, just two weeks after the end of the legislative session.

Worse yet, the agreement with OR includes an "out" clause, permitting the show to withdraw its five-year commitment to Salt Lake if the expansion doesn't happen as promised.

Despite all this, everybody involved seems to be remaining calm.

"It's natural to want to hang onto groups you've worked hard to keep," White said, "but we approached this in a scientific way."

Even apart from OR, the expansion is expected to generate $40 million in new visitor spending, according to the Bureau of Economic Research. Salt Palace's master plan already called for an expansion. And the CVB last year had commissioned a study by independent consultant Convention Sports & Leisure Intl. which indicated the facility would need at least 40,000 additional sq. ft. of meeting space to support existing exhibit space and accommodate the market 10 years from now.

"Excluding OR, since the announcement of the expansion, we've booked four other groups with a total attendance of 46,000 people," White said, "and we have active bids out on another 11 groups with 16,000 attendees.

"So, it's safe to say, we're pleased."