Chapter Eight: Uncommon Management

(Eighth in a series)

“I don’t like the way this process has played out. I have felt like I had a gun to my head.”

– Garth Sprecher, Lancaster County Convention Center Authority (LCCCA) board member, after voting to appoint Interstate Hotels the common manager of the convention center and hotel, September 12, 2001

If the controversy over the historical buildings and the hoteliers’ lawsuit were among the first early skirmishes in the convention center civil war in Lancaster, then the fight over who would manage the taxpayer-financed convention center was its first major battle.

The sparks that ignited this early conflagration were lit in the summer of 2000. In July of that year, after months of looking at the tourism and convention center market, a nine-member, LCCCA-appointed “Tourism Task Force” went before the LCCCA board and recommended the board expand the size of the convention center from 61,000 square feet to at least 100,000 square feet.

“We strongly recommend the authority employ further research to study why the convention center should be initially designed and built to be no less than 100,000 net square feet of exhibit space,” said Bradley Clark, chairman of the task force and member of the LCCCA board of directors at the July meeting.

In addition to Clark, a commercial realtor, the task force members included three representatives from the hotel industry; two restaurant executives, a theater director, a Lancaster Alliance director, and two members of the county visitors’ bureau board of directors.

The next month, at the August, 2000, LCCCA meeting, the board commissioned PricewaterhouseCoopers (Pricewaterhouse), an international hospitality consulting firm, to examine the viability of a larger convention center facility, and essentially re-size and update the Ernst & Young market analysis of 1999. The cost of the new study: $77,000.

As it did with the Ernst & Young report, Lancaster Newspapers reported that Pricewaterhouse was conducting a “feasibility study.” Again, this was misleading. Pricewaterhouse never claimed it to be more than a market study, nor did it perform a genuine feasibility study.

Both the Ernst & Young and Pricewaterhouse reports recommended a single or “common” manager for the hotel and convention center. The Ernst & Young report was commissioned by the Lancaster Alliance, three of whose founding members comprised Penn Square Partners, the ostensibly “private” owners to be of the hotel.

At the LCCCA board meeting on November 8, 2000, representatives from Pricewaterhouse delivered their findings to the board and the public. The meeting did not go without incident.

The Pricewaterhouse consultants estimated construction costs for the larger facility could reach $35 million, which could support a facility as large as 114,000 square feet – nearly double the original projected size.

The increase in cost, from the previous high estimate of $30 million, would fall directly on the taxpayers, particularly the county hotel owners.

During the public comment portion of the meeting, after Pricewaterhouse presented its report, Peter Chiccarine, the executive with the Eden Resort, and a litigant against the Authority, exchanged angry words with Pickard and the Authority’s solicitor, John Espenshade, who was also the county solicitor and partner at the Stevens & Lee law firm.

WHAT WAS SAID?

Espenshade threatened to call the police to escort Chiccarine out of the building.

“I was set up,” said a disgusted Chiccarine to reporters as he left the meeting.

In January, 2001, the LCCCA board mailed approximately 20 requests for proposals to potential managers of the convention center. By March, the board had winnowed the number to five firms, and by May, 2001, three companies made the ’short list’ as finalists: Spectacor Management Group, Global Spectrum; and Interstate Hotels.

All three firms were based in Pennsylvania, and experienced managing large and small conference and convention centers nationally. Spectacor, headquartered in Philadelphia, had the most experience with convention centers, managing more than 90% of the public convention space in the country, including several of the largest facilities in Pennsylvania. Global Spectrum, also based in Philadelphia, managed the Philadelphia Convention Center, among other large centers. Interstate, a Pittsburgh-based company, had a long partnership with Marriott Hotels, and also managed many large conference centers and several convention centers across the country.

In May, and again in August, 2001, the Greater Lancaster Hotel and Motel Association (GLHMA) sent a letter to Pickard and the LCCCA board urging a separate manager for the convention center, distinct from the still-unnamed hotel operator.

“The bottom line is that we opposed a common manager, period,” says Rodney Gleiberman, General Manager of the Continental Inn and GLHMA member, today. “We were not opposing this common manager, or that common manager. We opposed all common managers based upon the inherent conflict-of-interest, and what we knew would be another item to tip the scales in favor of the hotel competing against us on an uneven playing field.”

On July 24, 2001, Penn Square Partners announced that Marriott had been selected as the hotel ‘flag’ under which its hotel would be built, and that Interstate would manage the hotel.

The next day, July 25, Nevin Cooley, High Industries executive and Penn Square Partners President, urged the LCCCA board to select Interstate as joint manager of both the “private” hotel and “public” convention center.

This is when the battle exploded. The fight was staged on the front pages of Lancaster Newspapers, which found itself with a hot news story in the usually slow ‘dog days’ of August.

Cooley, the doughy, longtime spokesman and ‘right-hand man’ for Dale High, argued that through shared physical space, personnel, promotion, bookings, and other overlapping functions, that the LCCCA could save more than $600,000. This represented more than 40 percent of the estimated LCCCA annual budget.

In Cooley’s appeal to the Authority board, he said – but he did not provide a letter or statement corroborating his claim – that Marriott gave Penn Square Partners three months to complete contracts between itself, Interstate, and the Authority. Cooley added that common management was a condition Marriott was placing on its involvement with the project.

A Marriott executive, Roger Conner, in a late August interview with Lancaster Newspapers, contradicted this suggestion, saying, “Marriott does not dictate who must manage convention centers attached to Marriott hotels. We do not have a requirement that we must manage or our franchisee must manage every convention center that’s attached to our hotels. It would be pretty difficult to presume that any policy of such would exist.”

Cooley seemed to have a sympathetic ear in LCCA Chairman Pickard, who said at the meeting, “The two projects are more or less joined at the hip.”

For the next several weeks, through the month of August, the debate between common and separate managers for the convention center was regular feature on the front pages of Lancaster Newspapers. On August 9, the Intelligencer Journal ran a banner front-page headline and article:

“SPECTACOR MAKES PITCH TO MANAGE CONVENTION CENTER, WARNS OF POSSIBLE CONFLICT IF HOTEL’S FIRM IS IN CHARGE”

The next week, on August 15, the Tourism Task Force came back with its recommendation. By a vote of 7-2, the Task Force recommended Spectacor manage the convention center. The two Task Force members to dissent and vote for Interstate were Jack Howell, director of the Lancaster Alliance, and Deirdre Simmons, a director of the Fulton Theatre, who admitted she did not read nor reviewed any of the proposals.

On the same day the Task Force recommended Spectacor, the Lancaster New Era ran a front-page item:

– “WILL PANEL TAKE ADVICE ON FIRM TO RUN CENTER?” — suggesting that the LCCCA might ignore the recommendation of the panel it appointed.

On August 16, 2001, a group of hoteliers wrote a letter to Chairman Pickard, among other suggestions, stated:

“We experienced SMG’s proposal first hand and found their presentation compelling.  We left the meeting optimistic that SMG’s expertise in operating similar Convention Centers coupled with Interstate’s proven track record in successful hotel management will provide the Penn Square Project the best management team possible.”

On August 17, the Intelligencer Journal published an article, “WILLOW VALLEY WEIGHS IN ON MANAGER BID,” describing how the management of the Willow Valley Resort, which had been in lockstep with the Partners and the Authority until this point, recommended Spectacor and separate management.

Penn Square Partners went on the offensive, and used the front page of the Sunday News to threaten to abandon the entire project unless Interstate was selected to manage both facilities. On August 19, with a melodramatic, extra bold banner headline, the Sunday News reported:

“DOWNTOWN HOTEL TEETERS ON BRINK // PARTNERS IN WATT & SHAND BUILDING WILL PULL OUT IF CONVENTION CENTER AUTHORITY TAKES ADVICE OF TOURISM TASK FORCE FOR SEPARATE MANAGEMENT AND FACILITIES”

In a letter to the Authority board, signed by all three Penn Square Partners – High, Lancaster Newspapers, and Fulton – the Partners wrote:

“Despite the naysayers, Penn Square Partners persisted by investing substantial time, effort and money to promote this vision for a better Lancaster. The opponents chose to litigate and undermine the collaborative efforts proposed by Penn Square Partners and the authority. Their sole goal was to delay, postpone and destroy the project and the corresponding benefits to the community.”

The letter, much of which was printed in the Sunday News article, continues:

“If the authority board accepts the recommendation from the task force, Marriott will require the hotel to compete directly with the convention center for meeting and ballroom business.

“…It is the authority’s fiduciary responsibility to create a structure that optimizes the long-term economic viability of the convention center. To recommend otherwise is shortsighted, narrowly focused and only beneficial to the self-interest of a few hoteliers in the community. … Penn Square Partners will not be party to a structure that endangers the economic feasibility of the hotel and convention center project. It would be a greater disservice to the project and the community to proceed under the task force’s recommendation.”

At a LCCCA meeting on August 22, three top hospitality industry experts, each with decades of experience, spoke on behalf of separate management for the public convention center.

One of the experts, Robert Butera, president and CEO of Philadelphia’s Pennsylvania Convention Center, questioned whether, in fact, common management was a condition Marriott placed on Penn Square Partners.

“If that’s what it is, let’s call it that,” Butera said. “But it’s not. It’s a direct subsidy [to Penn Square Partners].”

Much of the Lancaster political and business establishment publicly supported Interstate. These supporters included County Commissioner Paul Thibault, Richard Kneedler, President of Franklin & Marshall College: the School District of Lancaster, and, perhaps the project’s most fervent supporter, Lancaster Mayor Charlie Smithgall, who was quoted at the time, “I don’t care if [Spectacor] is the most spectacular convention center manager in the world. I think it’s better to have Interstate manage it than to have nothing.”

The lobbying leading up to the scheduled, Wednesday, September 12, 2001, vote was so heated that, before dawn, on the day before, September 11, it drew the attention of Knight-Ridder, which picked up the story and ran, “Lobbying Intense as Lancaster, Pa., Convention Center Vote Nears.”

The Knight-Ridder article began: “As the vote nears on an operator for the planned Lancaster County Convention Center, the people who will be making that decision are reading letters and e-mails and answering their telephones. ‘I have never in my life received as much information about how I should vote on anything as I have in the last couple of weeks,’ said Paul E. Wright, one of seven appointed Convention Center Authority board members expected to cast their vote Wednesday morning….”

Considering the world-changing events of September 11, 2001, it is startling that the Lancaster County Convention Center Authority would hold its scheduled meeting for September 12.  Banks, schools, libraries – the entire country was closed; its people in collective shock the day after the terrorists’ attacks. But the Lancaster Convention Center Authority was open for business the very next morning.

Pickard had decided the LCCCA could not delay, by even a single day, the vote to determine which company would manage a convention center in downtown Lancaster, Pennsylvania.

The chambers at the Southern Market Center were unusually crowded, especially for a morning meeting. Approximately two-thirds of the audience members were in favor of Interstate managing the convention center.

Robert Butera, the industry executive who represented the Philadelphia Convention Center, bluntly told the board that Spectacor was clearly the better choice for the position of manager. The Task Force members spoke on behalf of Spectacor.

Then Dale High himself approached the microphone. High, medium height, in his mid 50s, wearing a business suit, with sloped shoulders, receding hairline, with a neatly trimmed beard, spoke: “This is not a matter of us taking our ball and going home,” he said, speaking on behalf of Penn Square Partners.

Then he compared the convention center project to the World Trade Center attack of the previous day , “As we saw with the Twin Towers; these things can be taken away in a day.”

After High spoke, the audience erupted into applause.

The LCCCA board later voted 5-1 to give the contract to Interstate Hotels. (Bradley Clark was not present). The dissenting vote belonged to Camilla Collova, who remarked, “The fact that [Spectacor] knows how to do it elsewhere tells me they can do it here.” Collova left the board the following month, as did Clark.

Mark Moosic, the Interstate executive eventually chosen to manage both facilities, said of the board’s choice of a single manager: “To me, this was a very clear decision. There are a number of synergies that can be used with one manager: minimized expenses by combining staff, sales, and operations between the two. You don’t need two separate leadership teams – two payrolls. There is also greater flexibility and efficiency with one manager.” Moosic also noted that Interstate manages facilities larger and with more complexity than the downtown Lancaster center.

Gleiberman, of the Continental Inn, who spoke at the September 12, 2001 meeting, said, “I did not, and do not, support common management for this project and do not believe that a single qualified candidate to work both sides of this project was even considered. Our public convention center needs an unconflicted captain at the helm to run the center in the most efficient way to protect its owner – the Lancaster County taxpayer. Time and time again, the presence of a public entity in the project has titled the scales away from the taxpayer rather than the other way around.”

Robert E. Field, a businessman with decades of experience in hotel and apartment development and ownership, and a later critic of the convention center project, in retrospect supports the LCCCA board’s decision: “I agree that the convention center and the hotel should be under common management for purposes of economy and to maximize sales effectiveness,” said Field, who is also publisher of NewsLanc.com. “I hold Interstate Hotels in high esteem. However, it would be essential that Interstate Hotels understands that, in representing the Convention Center, they are working on behalf of all hoteliers and the community, not just the Marriott.”

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Chapter Nine: “All Out War”

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