While it would not be feasible financially to build a hotel headquarter facility in Vermillion to host events for more than 250 people, there does appear to be support for a smaller conference center.
Those are the findings of a recent study performed by Conventions, Sports & Leisure, a Minneapolis advisory firm.
"The study (showed) that there was a significant need for local banquet, reception and meeting space," said Steve Howe, executive director of the Vermillion Area Chamber & Development Company, which commissioned the study. "It was estimated that we were missing out on about 50 percent of that business. …
"Single-day events are what we have a strong market for. Multi-day events we just couldn't support," he said.
Paid for with $25,000 of Vermillion NOW! campaign funds, the study found that Vermillion would be unable to support a larger facility in part because of its location.
This finding was based in part on conversations with representatives of larger conferences and events.
"Conventions, Sports & Leisure went in and interviewed over 100 of these organizations, and it was identified that they would likely not choose Vermillion due to its location in the state, our close proximity to Sioux Falls and Sioux City, and also out proximity in the southeast corner," Howe said. "It's difficult to get people from Rapid City to come to Sioux Falls, much less an extra-hour trip to come to Vermillion."
Another factor is lack of hotel space, which Howe said currently stands at "about 200 rooms."
"To bring in a conference of 250 people, we just don't have the inventory rooms to support that, and they don't anticipate that a conference center would bring in enough new business to justify a hotel adding rooms," he said.
The type of events the conference center would most likely attract would be larger wedding receptions, banquets, reunions and small commercial shows.
"The actual facility that was recommended was bigger than I originally thought we could support," Howe said. "What they're talking about is a facility between 18,000 and 26,000 square feet. It sits on a half-acre land with enough parking for 200. That's a fairly sizable facility, and it won't be cheap. It's going to be a significant investment to create a facility of this size."
The building would need a banquet space that would be sub-dividable for smaller events, as well as breakout rooms, kitchen facilities and ample parking.
"While we didn't do a formal location analysis, they did tell us it needs to be within walking distance of hotels and other amenities," Howe said. "So that plays a lot into where we might locate it. There's only a couple places in town with hotels, so if we want to do it right there's not many places that it could go."
All discussions regarding location are purely speculative at this point, he added.
Another question remains: What actual economic effects would such a facility bring to the community?
"Will it increase room nights? Will it increase restaurant sales? Will it increase sales at Wal-Mart? Will we see an increase of tax revenue as an indirect result of a facility like this?" Howe said. "That's an important thing, if we're going to ask the public to support something like this, we need to show that there's a benefit to the community."
For this reason, an economic and cost benefit analysis may be performed by Conventions, Sports & Leisure, which would cost $10,000. Funding – which would come from the Chamber budget – will be approved or rejected based on the type of information the analysis would provide.
The findings of the first study recently were presented to the Chamber board and the city council, and the economic analysis could be done in 60 days, Howe said.
"We intentionally split this into two phases," Howe said. "We didn't want to pay for the economic impact study if the market wasn't there. That would just have been throwing money away. Now that we know that the market is there … we can do the next step."
Of course, the economic analysis also could be the last step of the process.
"We're prepared also that the answer to these questions might be 'no,' that we're not there," Howe said. "We're willing to spend the money to find out that answer."
The initial study was undertaken after the Chamber received a number of inquiries regarding an event center of some kind.
"We didn't want to make any decisions based on anecdotal information, so we gathered a group of people together to serve as a taskforce to look at the conference center," Howe said.
The group included such people as hotel managers, caterers and other local businesspeople and officials.
"They met several times and came to the conclusion that, yes, we do need to do a formal study on this. There was a desire by the community for this type of space," Howe said.
More public input is being sought, however, before the decision is made to allocate the funding for the economic and cost benefit analysis.
"We're doing our best to include as many people as possible. We want everybody's opinion," Howe said. "Our goals right now are to get as much feedback as possible in the next 30 days."
Howe will make his final recommendation to the Chamber board about whether to allocate the funding for the analysis this month.