Three's a Crowd in Sioux Falls

Global Spectrum takes over management of center from Hammons

By Rachel Wimberly -- Tradeshow Week, 6/11/2007

Sioux Falls, S.D., with its 200,000 inhabitants, may not be a big city, but a big battle was waged there recently when it initiated a competitive proposal process for management of the Sioux Falls Convention Center. As a result, hotelier John Q. Hammons lost the management contract to Global Spectrum and Ovations Food Services, both of which are subsidiaries of Comcast-Specator.

Global Spectrum isn't the only entity that looks like it might benefit from the change. Also figuring to take advantage are the Sioux Falls Convention & Visitors Bureau and almost every hotel in town — except one.

Hammons' company, John Q. Hammons Hotels & Resorts, built the 253-room Sheraton Sioux Falls next to the convention center almost a decade ago. According to its management contract, the company had the exclusive right to book events in the convention center and help them find the hotel rooms they needed.

When Global Spectrum takes over managing the center, the Sioux Falls Convention & Visitors Bureau, which has not been involved in bookings at the center at all during Hammons' tenure, will take on a more typical CVB role: scheduling shows 18 months out or more, and leaving the shorter-term business to Global Spectrum.

CVB Executive Director Terri Ellis-Schmidt, a 24-year veteran, said: "We are very excited as a bureau to have this opportunity. Our community, especially the industry folks, are also excited. It's nothing against John Q. Hammons but, especially for our other hoteliers, I'd rather have an objective non-hotelier selling the center."

The Sioux Falls CVB is funded by a 1-percent bed tax, according to Ellis-Schmidt, and the bureau did sales and promotions for all the hotels, including the Sheraton Sioux Falls. But Hammons never gave the bureau access to any booking information for the center. There were complaints from other hoteliers, she added, because Hammons' hotel usually benefited directly from any shows it booked.

"For them to be running the convention center made it challenging for other hotels and the CVB," Ellis-Schmidt said.

A mayor and city council that are now long gone made the decision about 10 years to give Hammons the lucrative contract for the center, according to Ellis-Schmidt. The current mayor, Dave Munson, had to wait until the contract was set to expire before he could put the center out to bid.

John Q. Hammons did not return calls for comment, but told the Sioux Falls Argus Leader he was "shocked" and "surprised" by the city's decision to turn over management of the center to another firm. He also told the paper he might pull his hotels out of Sioux Falls altogether.

John Q. Hammons Hotels & Resorts also owns the Holiday Inn City Centre in downtown Sioux Falls.

"I have no idea if he will pull out or not," Ellis-Schmidt said. "I just know someone will snatch those hotels up pretty fast, especially the one next to the center. They are great hotel people, and we would love for them to stay, but he's going to do what he needs to."

Philadelphia-based Global Spectrum runs a number of convention centers across the United States, including the Duke Energy Center in Cincinnati, the Miami Convention Center and the Iowa Events Center — Polk County Convention Center in Des Moines, Iowa.

"This is a wonderful opportunity for our company as we continue our rapid growth," Global Spectrum CEO John Page said. "We're looking forward to working closely with the city of Sioux Falls and their convention and visitors bureau to provide a memorable experience for each guest attending an event at this beautiful facility."

Frank Russo, Global Spectrum's senior vice president of business development and client relations, said the company would officially take over the center July 2.

Russo has a long history in Sioux Falls, having worked for Ogden Entertainment, the company that managed the center before Hammons.

"I was convinced Sioux Falls was a good market (for Global Spectrum)," he said. "We have now reinforced our position in the secondary market business."

Russo said he thought Global Spectrum won the bid because its numbers represented a "huge increase for the city compared with the deal they had with John Q. Hammons."

That company "was incentivized to have the hotel do well," he added. "It became a question of who's the tail and who's the dog."

Global Spectrum also runs the St. Charles Convention Center in St. Charles, Mo., which also has a Hammons hotel next to it. "We work with him cooperatively there, and I hope we will be able to do that here as well," Russo said.

In the bid process, Global Spectrum also beat out SMG, which runs the Sioux Falls Arena attached to the 60,000 square foot center. SMG's contract on the arena expires in June 2008.

"We would love to have the opportunity to manage the entire complex," Russo said.

For now, he added, the company is focusing on planned upgrades for the center, including a cyber cafe and new art.

"Being in Sioux Falls is right on target with our business plan," Russo said. "It's exactly the kind of market we specialize in."