Consultants: Sioux Falls needs to add 300+ hotel rooms for downtown convention center

June 24, 2025

A new downtown convention center would demand between 300 and 400 new hotel rooms to support growth in event business, according to consultants working through options for a proposed facility.

A team from Johnson Consulting met with multiple groups Tuesday to update its progress.

After looking at demand for the existing convention center and the capacity of the proposed Riverline Disrict site in downtown Sioux Falls, the consultants most recently studied hotel need and financial options tied to a new facility.

At a meeting of the events center complex advisory board, members learned there currently are 297 hotel rooms within a 15-minute walk of the proposed location east of the 11th Street viaduct, according to a Johnson Consulting analysis.

In contrast, a facility studied in Fort Wayne, Indiana, offers 756 rooms in a similar radius.

“Purely in terms of volume, I think we would want to see additional inventory to support the facility,” said John Fleming, associate project manager.

Ideally, that would be a dual-branded hotel — part upscale full service and part midscale to be accessible to “two price tiers of customers,” he said.

“It’s really critical to think about how a hotel is able to support and how your hotel environment is able to support these convention-goers. If there’s nowhere for them to stay or if the places to stay aren’t appropriate for the types of events we’re talking about, it’s not going to be the attractive opportunity it could be.”

More broadly, the city’s hotel market is projected to need to add new inventory by 2030 to maintain 70 percent occupancy, the report found. With net room nights from the Riverline convention center, citywide occupancy would reach 91 percent by 2034.

The proposed convention center would offer more than twice as much space as the Sioux Falls Convention Center, with 135,000 net usable square feet versus 60,510 square feet. The largest contiguous space would be 75,000 square feet versus 50,400 square feet.

An initial site study shows room for convention space and hotels at the Riverline site.

“With this program, we believe it’s setting up the community to capture what we see as the current market for this convention opportunity but also future-proofing it so this is able to serve the community’s needs for the next 15 to 20 years,” said Brandon Dowling, principal at Johnson Consulting.

Five years after opening, overall convention center attendance will have gone from about 156,000 in 2024 at the current facility to more than 210,000, according to the firm’s analysis. By the fifth year, a Riverline site is expected to generate more than 14,000 hotel room nights.

The initial projections show an operating shortfall every year ranging from $215,000 to more than $1 million. That’s offset by taxes the city will generate through the facility, leaving the gap at $134,000 to $513,000 the first two years as operations ramp up and ending at more than $1 million in positive territory by year five.

A downtown facility is projected to generated $55.8 million in annual economic impact — everything from direct spending at businesses to dollars that then get multiplied through employee earnings and business spending. Direct fiscal impact on the community is expected to be $2.7 million annually, with 278 full-time equivalent jobs created.

“More out-of-town visitors really cause that sort of economic development and increased spending in the community,” Dowling said. “I think we were fairly conservative, understanding this is a little bit of a different model and a different building.”

An overall construction cost hasn’t been finalized yet but has been estimated at up to $250 million in current dollars. Funding sources could include:

• Existing city capital funds.
• Private participation/philanthropy.
• State and federal grants.
• Private economic development grants.
• Naming rights.

Sources used to fund debt could include general obligation bonds; limited or special obligation bonds tied to hotel revenue, business improvement districts or sales tax; and tax capture zone bonds such as a TIF, or tax increment financing, district.

In addition to Fort Wayne, the consultants looked at Grand Rapids, Michigan, as model communities. In Fort Wayne, consumer and trade shows are held in one venue while a downtown convention center hosts business-focused events and other local and destination meetings.

The current Sioux Falls Convention Center is so busy it is constrained in booking future events, Dowling said.

“The calendar is limited to attract large-scale events that book further out,” he said.

Johnson Consulting plans to finalize phase two of its report in the next few weeks, which will include updated cost estimates, the hotel market study and options for ownership and management of a facility.

From there, it will move to an implementation strategy.

The Riverline site is a “generational opportunity, an investment to really catalyze a downtown area,” Dowling said. “Land of that size and location is rarely available for a community of your size with the growth you’re experiencing.”

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