Tourism & Hospitality and Sports Business

IMS mulls hotel: Convention-level facility connected to track would diversify Speedway's revenue stream

August 22, 2005

Sources close to the Indianapolis Motor Speedway say management is working on plans for a convention-level hotel on a 16-acre lot just south of the track's 16th Street entrance.

Under consideration is a multilevel hotel connected to the track via a skywalk and a new set of track-side suites and condos near turn two where the Brickyard Crossing Inn sits. The inn would be torn down to make room for the suites and condos, which will better complement the new hotel.

Though IMS officials said nothing is imminent, President Joie Chitwood said the parking lot that housed a Steak n Shake restaurant, Classic Motor Inn and American Art Clay Co. before it was acquired in parcels in 2003 and 2004 by the Speedway, has been the subject of recent discussions.

"For now, those areas will remain a parking lot," Chitwood said. "We're still developing plans for the future which would include any major capital improvements and investments. We're trying to see what makes sense there."

Chitwood flatly denied IMS officials were negotiating with officials from the town of Speedway and city of Indianapolis to get Georgetown Road moved a quarter-mile west. A story surfaced on the Yahoo! Sports Web site this month reporting that IMS officials sought the move to make room for an expanded main grandstand, including suites and corporate entertainment accommodations.

"So many people are interested in what we're doing, I think that's how these stories get started," Chitwood said.

He said the only plans for the grandstand this off-season involve routine upgrades and maintenance.

"We do look at the grandstands for continued renovation," Chitwood said. "We haven't been shy in making improvements to this property."

Any development is likely driven by the IMS' desire to become a year-round entertainment and corporate hospitality powerhouse rather than to increase attendance for race days, said Tim Frost, president of Frost Motorsports, a Chicagobased consulting firm specializing in motorsports business operations.

The strategy, Frost said, is to diversify the Speedway's revenue stream and loosen its financial reliance on a few days surrounding each race.

The Speedway has made a concerted thrust since 2001 to market its hospitality services, but success was at first stifled by 9/11. IMS officials nevertheless found creative ways to use new infrastructure, such as F1 garages, for corporate entertainment.

"I think their eyes were opened up to a new revenue stream," Frost said.

The hospitality initiative began to pay dividends in 2004, when IMS officials said they retained all but 12 of 200 corporate hospitality clients at the track during May from the year before, and added about 70 new corporate clients.

"I think what you saw was a pent-up demand, and a timely marketing effort," Frost said.

With IMS' NASCAR, Formula One, Indy Racing League and other motorsports contacts, industry experts said, the Speedway's hospitality department Rolodexes probably have the names of at least 750 U.S. and foreign companies, including many of the Fortune 500.

"Their mission is to be an international leader in motorsports, and that goes beyond its three racing events," said Bob Schultz, of the Indianapolis Convention and Visitors Association. "They host testing and could bring in many other motorsports-related events."

Even though city officials have occasionally worried about having a glut of hotel rooms in Indianapolis, Schultz thinks a multistory hotel and conference center connected to the Brickyard would fit nicely into the cityscape.

"This fits into the ICVA's strategy of going after the size of events that would fit into a single hotel with convention space," Schultz said. "We would welcome the opportunity to work with the IMS on sales and marketing."

Tourism industry sources said for a hotel and conference center to be viable, it would have to maintain occupancy near 60 percent year-round.

"Any entity that wants to build a hotel and convention center must understand the demand nature," Schultz said. "You don't build a church for an Easter Sunday crowd. You can be sure, before [IMS officials] break ground, they'll have done their due diligence."

Speedway Town Council members and the town's attorney and manager are meeting with Chitwood Aug. 22 to discuss the town's redevelopment and how the IMS might fit into those plans.

Speedway Town Council Vice President Lucinda Hillmer said town officials want to create a "motorsports campus" and want the IMS to be part of the effort.

"We think it's time we discuss our revitalization plans with the Indianapolis Motor Speedway," Hillmer said. "We have great plans, and it's time we talk to [IMS officials] about those plans."

B u t S p e e d wa y Town Council member Edward Frazier said town officials are in the dark about any imminent construction at the track.

"We've certainly heard talk about major improvements coming at the track, but nothing official," he said.

That doesn't mean planning isn't in the works.

"Their plans could be pretty far along before we got involved," Frazier said. "I'd say we have a cooperative relationship with them, but I wouldn't call the relationship between the track and town council tight."

Major expansion of the main grandstand along the track's front stretch seems remote in the near term.

The Speedway has been buying significant chunks of land west of Georgetown Road for years-under its own name and through Georgetown Realty Co. Inc. But there are still a number of privately owned parcels, including residential and commercial development, that would make a road realignment difficult.

Some sources said IMS officials are concerned that some of the aura of the Brickyard would be lost if the main grandstand were modernized, but not everyone agrees.

"In this modern day, you can only hold onto the past for a certain length of time," said Derek Daly, a former race car driver and longtime motorsports commentator, including work locally for WISH-TV Channel 8.

Daly said IMS officials might be more troubled by attendance considerations.

"They have enough trouble filling the grandstands already, so it wouldn't make sense to expand it too greatly," Daly said.

Though IMS officials don't disclose attendance figures, most observers said the Brickyard 400 NASCAR race is sold out, the Indianapolis 500 is a near-sellout, and the U.S. Grand Prix Formula One race has seen static to slightly declining attendance and is at least 100,000 short of a sellout.

If the IMS were to get Georgetown Road moved a quarter-mile west, it would come close to doubling its 559 acres. While IMS is a massive sports facility, it pales in comparison to sites such as Chicagoland Speedway, which sits on 930 acres, or the Nashville Super Speedway, which sits on 3,100 acres.
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