LVCVA, vendor at odds over convention center food contract

Wednesday, April 11, 2001 | 10:38 a.m.

Negotiations have stalled with the Las Vegas Convention Center's food service provider and the Las Vegas Convention and Visitors Authority's board of directors is reluctantly considering putting the contract out to bid.

The board unanimously agreed Tuesday to conduct a special meeting on April 24 to consider whether to retain ARAMARK Sports & Entertainment Services Inc., which would continue to have exclusive rights to all food service sales at the Convention Center under the contract.

Philadelphia-based ARAMARK, which also provides food service at Cashman Field under a separate contract, is the market leader in convention center and stadium food concessions in North America, with contracts at 28 facilities. The company, which has held the Las Vegas Convention Center contract for 30 years, also is the concessionaire at convention operations in New Orleans, Philadelphia and Los Angeles.

LVCVA President Manny Cortez said the ARAMARK contract has been in negotiation for nearly a year. But wrapping up the deal is becoming critical for the agency because ARAMARK's current contract runs out in December and the LVCVA wants a deal in place within a month to assure that it gets a $12.5 million contribution from the contract holder to pay for new food service facilities in the new South Hall expansion.

Cortez said it's nearly time for new kitchen and catering services facilities to be built at the expansion, which is scheduled to be opened in early 2002 in time for the Winter Consumer Electronics Show.

At issue for ARAMARK is the length of the contract. The company wants a 15-year deal, while LVCVA board members want a shorter term. ARAMARK has proposed a 10-year term with a five-year extension, but wants some assurances that it would be able to recover a fair return on the investment of the $12.5 million it is paying for the new food service facilities and $500,000 it must contribute to renovate existing kitchens.

Mark Haley, executive vice president of convention center services for ARAMARK in Las Vegas, said the company expects at least an 8 percent annual return on its investment and 15 percent over the 15-year life of the deal it wants.

But the LVCVA, which makes about a 29 percent return on its food contract by comparison, knows that the convention center would likely make more if the deal is for a shorter term.

Board member Steve Greathouse said it may be time for the agency to consider seeking a new contractor, even though the LVCVA has been happy with ARAMARK. Cortez said if the LVCVA does not receive a grant to build the food facilities, the money could come from bond funds being used to build the expansion. He indicated if that occurs, there may be some cuts necessary in some other aspect of the project.

The board directed the LVCVA staff to go back to negotiations with ARAMARK and then set a meeting in two weeks to consider whatever deal is proposed. If no agreement is reached, the agency's purchasing department would put together a request for proposals for a new contractor and put it out to bid.

Haley said because ARAMARK is the market leader, many potential competitors may not be as capable as his company at providing the level of service Convention Center users expect. Asked what companies would be capable of bidding for the contract, Haley listed:

* Levy Restaurants, Chicago. The Sports & Entertainment Group of that company provides convention food service for the Orange County Convention Center in Orlando, Fla., McCormick Place in Chicago and the America's Center Convention Center in St. Louis. The company also is the food service provider for Wrigley Field and Comiskey Park, two Chicago baseball stadiums.

* Volume Services America, Spartanburg, S.C. VSA provides the food service for 20 stadiums nationwide, including the new Pacific Bell Park, a baseball stadium where the San Francisco Giants play, and Invesco Field at Mile High, the new stadium opening next fall for the Denver Broncos.

* Fine Host Corp., Greenwich, Conn. The company also has a generous mix of convention and stadium contracts, providing the food service for Bell County Expo Center in Belton, Texas, and the Arlington Convention Center in Arlington, Texas. National Football League stadiums served include PSI Net Stadium, home of the Baltimore Ravens; Sun Devil Stadium in Tempe, Ariz., where the Arizona Cardinals play; Raymond James Stadium, Tampa, Fla., home of the Tampa Bay Buccaneers; and Pro Player Stadium, Miami, home of the Dolphins.

Other industry competitors are Sodexho Marriott Services Inc., Gaithersburg, Md.; Delaware North Companies Inc., Buffalo, N.Y.; and Compass Group PLC of Great Britain.