Welcome to the September 23 Monday Business Briefing.
This is your private business intelligence briefing, with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post at 7 a.m.
As we prepare for our Insider’s Meetup this afternoon at Vincenzo’s, we’ll have multiple topics, including what we predict will offer a fascinating peek into the ultra-competitive convention and tourism business …..
• Our insiders tell us most outsiders don’t realize what a high-stakes game tourism is for Louisville. But we may all get insights into how the business works thanks to an unprecedented suit. Greater Louisville Convention and Visitors Bureau officials are suing a former senior sales manager, charging the person with giving a private company confidential and strategic CVB information.
IL is withholding the executive’s name, because we were unable to contact defense attorneys. But for CVB executives to take this to the courts, rather than negotiating an outcome behind the scenes as an HR issue, tells us they’re ready to draw the line on what may be essentially business espionage.
In the suit, the CVB alleges that Scottsdale, Ariz.-based Hospitality Performance Network hired the executive in October 2011, but encouraged the person to remain at the CVB.
“HPN encourages employees to continue working for their employer for six months,” the complaint states. CVB officials allege that while employed at HPN, the sales manager spent time until her departure preparing to compete with CVB and “utilized CVB assets for personal gain and misappropriated and diverted certain trade secrets, confidential documents and propriety information.”
Those included giving HPN Global a list with 44,000 potential client contacts. Information HPN passed on to their clients … for a fee.
From the HPN Global website:
HPN Global is powered by the world’s top hospitality executives. Our unique structure allows us to organize successful events for organizations large and small, wherever they are in the world. From site selection to contract negotiations, our professional conference planners do it all.
Negotiations for meetings, conferences and conventions pit city against city and start years out from the event dates. Last month Jim Wood, CVB president and CEO, told us that he and economic development officials devote huge amounts of time and resources to pursuing big events.
For example, CVB and Greater Louisville Inc. economic development executives flew to Manchester, N.H. last month to pitch the FIRST Robotics Championship. The prize; perhaps 10,000 attendees spending $10 million. The CVB spent about $40,000 to create a custom video highlighting all of Louisville’s advantages … a video that included pitches by Metro Mayor Greg Fischer and Gov. Steve Beshear.
Had an insider intercepted the FIRST Robotics request for proposal, then known the details of the CVB’s pitch, a third-party company could have used that information to help their client compete against Louisville.
“Think about not having to prospect for events, just pulling in that information from convention bureaus and hotels,” said an insider. There’s a lot more to it than this, but in the interests of brevity, we’ll leave it there for the moment.
The case was filed in late 2012 but has just entered the Jefferson Circuit Court dockets. A pre-trial conference is scheduled for Tue., Oct. 15.
• Speaking of the convention and tourism business, to give you an idea of the economic impact, this is from this month’s Kentucky Fair Board newsletter:
When the Kentucky International Convention Center hosted FandomFest in July, it brought together more than 40,000 fans of Fantasy, Sci-Fi, Anime and Gaming. This unique convention, with the help of others like it, made July a record-setting attendance month for the downtown convention center.
During the 31 days of July, the convention center brought in 157,510 attendees, more than triple the average of 43,000.
The Kentucky International Convention Center is important to the downtown Louisville area and Kentucky as a whole. With over $21 million in economic impact just in the month of July, the numbers speak for themselves.
• Despite a lack of energy in the downtown office market, which has resulted in half-full office towers all over the central business district, there is jockeying for sound historic buildings. Friday, we got more calls about the Progress Paint building. Apparently more than one group of developers/investors sees the building as a super residential rental play.
About nine months ago, we told you Jeff Butler and LDG Development were working with investor Vince Rosenblatt and ADS Holdings to convert the old Progress Paint building on Brook between Market and Main Streets. Now we hear more than one out-of-town group is vying for the building. More on this as we get the details.
• Speaking of downtown office space, we hear partners Sandra Frazier and Jonathan Blue are about to go all in on the Landmark Building, gutting the building on the way to turning it into high-end office space.
There was a period last year when the Landmark landed the business office for the University of Louisville Physicians Group in their transition to the Nucleus building. Then, it appeared that Greater Louisville Inc. was going to move to the building in a showdown with Fenley Real Estate over its Main Street offices. A deal that fell through.
And then, the phones stopped ringing for downtown office space. The question is, where do Frazier and Blue see the downtown office market going? “They have to reinvent that building,” said one downtown player.
• The buzz this week in the hospital world was only tangentially about the Norton Healthcare/University of Louisville showdown over Kosair Children’s Hospital. The buzz was more about, “What’s going on with KentuckyOne Health?” U of L’s partner in University of Louisville Hospital.
KentuckyOne was created last January out of the merger of the Kentucky operations of Catholic Health Initiatives, U of L hospital and Jewish Hospital & St. Mary’s HealthCare. CHI agreed to a joint operating agreement with JHSMH and University Medical Center in which CHI is committed to injecting $173 million over five years, as well as loaning UMC $40 million to pay down debt.
Then CHI executives announced they’d spend more than $5 million to refurbish Jewish Hospital Medical Plaza, at 100 E. Liberty St. into the KentuckyOne headquarters.
Now, that plan is suspended. We tried to talk to CHI officials, but never got a call back. Our insiders tell us KentuckyOne is losing $20 million per month. We told you last month that KentuckyOne Health lost $135 million during the 2012/2013 fiscal year ended June 30. CHI executives fired the KentuckyOne CFO last month after only seven months on the job.
So, the question becomes, how much can U of L rely on CHI in the future if the Denver-based system – the third-largest religiously affiliated system in the United States – is struggling financially in Kentucky? Our sources say there was a time not too long ago when U of L relied on Norton for financial assistance.
Last month, the public got a shocker: U of L and Norton were at war over pediatric care, with Dr. David Dunn, U of L executive vice president of Health Affairs charging Norton’s co-management agreement with University of Kentucky Children’s Hospital is “a blatant attempt to create a virtual monopoly for themselves in high-end, lucrative neonatal care. This end run will bankrupt the U of L Department of Pediatrics and threaten the viability of the entire U of L School of Medicine.”
So, where does this all leave U of L if they can’t come to terms with Norton on Kosair?
Preservationists fought to save the building, though it deteriorated badly over the years because no one wanted it.
Finally, last March, a tentative deal was struck to demolish the building, then build a One MD doctors office that would look just like the original building, along with a Mesh Restaurant next door.
The restaurant deal is moving forward. But our sources tell us the doctors office deal is dead after the first group of physicians pulled out. Then, we got multiple sources sending us the advertisement for the property, at right. Then, we notice the image looks nothing like the original Bauer building. Hmmmm.
• Back in January, we told you about how the heroin epidemic is manifesting itself into burglary rings hitting homes across Louisville, often in broad daylight. Police sources tell us that trend is continuing, with several homes in wealthy neighborhoods broken into multiple times during the last year.
Narcotics detectives have told us they believe 80 percent of all property crimes committed in the 5th division – the Highlands area – are committed by heroin users.
Friday, we got another glimpse from insiders about how bold these rings are getting. Sources tell us thieves hit the Arhaus store at Mall St. Matthews on Shelbyville Road, “literally walking in and stealing furniture.” In this case, a couch. The thieves walked in, took the couch while store employees were distracted, and left. One word: Chutzpah.
• A lot going on in the Highlands. Heine Brothers’ is expanding its Longest Avenue coffee shop, the second Heine Brothers to open all those years ago. Where it’s going is not clear since it shares the first floor of the Highlands building at 1295 Bardstown Rd. with a Carmichael’s Booksellers location.
The application to the Bardstown Road Overlay committee states the building owner is T.C. Peters Construction, owned by Tim Peters. Who long ago moved his offices out of the building to NuLu. Which suggests the coffee shop may get a second floor. Applicant is Carter Scott, Architectural Artisans.
At the same overlay committee meeting, there was an application to demo the building located at 2222/2226 Bardstown Rd., which includes the Tuesday Morning location and the former ear X-tacy store, and replace it with a new CVS store. Sources tell us a deal is in the works to put a Kroger gas station at 2410 Bardstown Rd. where the CVS is now.
• Last week, we told you about Springstone, the Louisville-based health care firm that’s building a network of recovery hospitals from Ohio to Texas … which means we have a health care HQ hardly anyone has heard of. Make that two. Gary Thompson, former Humana vice president of Clinical Programs, is putting together Imperium Health Management, a firm that helps doctors groups form accountable care organizations.
ACOs are sort of like all the best practices in health care distilled into one model. The ACO model establishes incentives to increase quality and efficiency, better coordinates patient care, eliminates waste, and eliminates overuse and misuse of care. Savings come from controlling costs through healthy consumer behavior and quality incentives for doctors from insurers. And it’s a model highly reliant on expanded data sharing. Which explains why Louisville’s No. 1 Big Data expert, Grace Simrall, is on the staff.
• This is a blast from the past. Richard Reeves, who was the Louisville restaurant macher back in the 1990s, has resurfaced in Louisville. Our sources say Reeves is trying to raise $10 million to build a franchise called World of Beer. Reeves has had, to say the very least, an interesting career, starting out with KFC and Chi-Chi’s. Then, he gathered a group of investors to build the elaborate Oldenburg Grill microbrewery off Dutchmans Lane in The Springs. A $3 million-plus bust. Then Reeves and former Tumbleweed International CEO Terry Smith were going to build Tumbleweeds across Europe. Which never happened.
The original Tumbleweed investor group went bust. Reeves then ended up at Bearno’s in a deal to take the Louisville pizza chain international. Which never happened. Apparently, in the franchising business, hope springs eternal.
• As part of its “American Whiskeys” campaign, Louisville-based spirits giant Brown-Forman has opened American Whiskey bars in European and British airports including London Heathrow, London Stansted, London Gatwick and Manchester. Our insiders tell us BF means to own the duty-free and global airport sectors. Which is a pretty efficient way to reach tens of millions of well-heeled travelers around the world who may not be able to purchase Brown-Forman products in their home countries.
The American Whiskey portfolio highlights Jack Daniel’s and Woodford Reserve in the bars, “which feature a whiskey barrel motif of wood textures and brass and serve as a virtual classroom in the history and art of distilling America’s spirit,” according to DFNI online.com, the top travel retail industry site.
• As we told you a couple of weeks ago, the former Mercy Academy property in the Original Highlands is under contract. And as we told you, the buyer will use the former girls’ school for a substance abuse rehabilitation facility. Fitting since it’s next to a Kindred hospital. Simsbury Associates, based in Braintree, Mass., is the buyer.