Showdown in Kissimmee

By Michael Hart -- Tradeshow Week, 6/20/2005

In this post-Brookings Institution report era, when there is a question about how much exhibition space is too much, a small county in suburban Orlando is trying to decide whether it wants a 400,000 square foot convention center — or a 1.1 million sq. ft. one.

The Osceola (Fla.) County Commission will vote June 20 on whether to spend $350 million to build its own convention center in Kissimmee, give Gaylord Hotels $109 million to expand the nearby exhibition hall it already owns, or forget the whole thing altogether.

All this in an area that already has nine exhibition halls (according to the 2004 Tradeshow Week Major Exhibit Hall Directory), including the 1.1 million sq. ft. Orange County Convention Center in nearby Orlando.

For 15 years, local political leaders have wanted their own municipally owned center, believing they were missing out on tradeshow and convention business pouring into the Orange County CC and smaller exhibit halls in neighboring cities.

They may have come closest a year ago when Austin, Texas-based FaulknerUSA said it would build the convention center in Kissimmee. Then, at almost the last minute, FaulknerUSA backed out when it couldn't land the financing or convention center hotel deal it wanted.

Now, FaulknerUSA is back — but so is Gaylord. And an evenly split (at press time) county commission must choose which offer to take, if it takes one at all.

FaulknerUSA's plan is to build a 400,000 sq. ft. Osceola County Convention Center, to be managed by Global Spectrum, and a convention center hotel, to be operated as a Sheraton by Starwood Hotels. Most of the funding would come from bed taxes, but FaulknerUSA would chip in $18.5 million, pay for the 70 acres required and transfer complete ownership of both the hotel and convention center to the county in 2021.

Gaylord Palms Resort & Convention Center wants $109 million from the county to build a 700,000 sq. ft. expansion to the 400,000 sq. ft. exhibit hall it already owns in Kissimmee. Gaylord said it would match the county dollar for dollar on construction costs and call what would eventually be a 1.1 million exhibit hall the Osceola County Convention Center at Gaylord Palms.

Both FaulknerUSA officials and County Commission Chairman Paul Owen say there is an untapped market for small to midsized shows and meetings that would fill the 400,000 sq. ft. center for years to come.

"There are lots of shows that have been priced out of Central Florida," said Terry Dusek, communications director for FaulknerUSA.

Owen said the county owned convention center could generate $500 million in economic activity for the area over the next 30 years, "if the projections are accurate."

Gaylord officials said the Orlando area has all the midsized exhibition facilities it needs and, to be competitive, the next one to be built must be able to go head to head with some of the largest convention centers in the United States.

"For a third of the money, we could compete not just with Orange County (Convention Center), but with places like the Venetian and Mandalay Bay in Las Vegas," said Keith Salwoski, public relations manager for Gaylord Palms, which opened the existing 400,000 sq. ft. exhibit hall it wants to expand two years ago.

Gaylord Hotels Executive Vice President and COO Jay Sevigny said, "If we are successful in having our proposal accepted, we think it allows us to develop it into the finest convention hotel in America."

While the debate could appear to be between which kinds of tradeshow and convention business to go after — those at the top end of the TSW 200 that would require close to 1 million sq. ft. of space, or those that could fit into a cozier 400,000 sq. ft. municipally owned center — in Kissimmee it is really a political battle for control of the local 6-percent bed tax.

"There are a lot of folks competing for this town's tax money," Dusek said.

Owen wholeheartedly supports the FaulknerUSA project because the county eventually has full ownership of the center and hotel, which is not the case with the Gaylord project.

Plus, Owen said, "I feel that with Gaylord, if it's profitable, they'll do it without our help."

Gaylord officials don't deny they want to protect their franchise in the area.

"We've already spent $425 million in Osceola County," Salwoski said, "and now the county wants to turn around and try to hurt our business."

In the meantime, the Kissimmee-St. Cloud Convention & Visitors Bureau, which would be charged with marketing whatever convention center is built, is trying to stay as far away from the political squabble as it can get. In fact, bureau Executive Director Tim Hemphill refused to speak with TSW.

However, the bureau's public relations director, Larry White, said, "We are a county agency. Until the politicians decide which way we're going, we don't want to send the wrong message as to what our expectations are."

As TSW went to press, Owen and one other county commissioner favored the Faulkner USA proposal and two others favored the Gaylord plan. A fifth commissioner planned to abstain, fearing a conflict of interest, because he works for a company that does business with FaulknerUSA.

"It gets pretty political," Owen said. "It's anybody's guess as to what's going to happen on the 20th."