June 16, 2021

This paid piece is sponsored by The Ramkota Companies Inc.

They were farmers, but they read the map like developers.

It was in the 1960s, and the Dickey family saw that interstates 29 and 90 would be intersecting — and that an interstate exit would be built near Russell Street.

Near their farmstead.

Suddenly, instead of farmland, they envisioned a hotel.

“So they decided to go ahead and do it,” said Bob Thimjon, CEO of The Ramkota Companies.

By 1965, with help from their friend Henry Carlson, the hotel was under construction, originally as a 119-room Ramada. It opened the following year, owned by families from Sioux Falls, Canton and Mitchell.

More than 55  years later, The Ramkota Companies has grown far beyond that single hotel, now a Best Western Ramkota.

It’s now an employee-owned hospitality powerhouse, with a portfolio that includes 41 hotels totaling nearly 5,000 rooms.

It has about 4,000 employees at the peak of tourism season, including about 200 locally.

Based in Sioux Falls, the company’s reach includes state parks in Ohio, destination resorts in the Okoboji lakes area in Iowa and some of the Black Hills’ most popular lodges.

“It’s an incredible South Dakota success story, and in many ways it’s just getting started,” said Thimjon, who joined the company in 1985.

“When people think of the Ramkota, they think of our presence in Sioux Falls. But our business reaches far beyond Sioux Falls.”

Growing a portfolio

For the first decade, Ramkota grew slowly yet steadily, adding hotels in Aberdeen and Watertown, but there was room for improvement, Thimjon said.

“A consultant said they needed someone who knows the business, so they did a search and came up with Dave Sweet, which became a pivotal moment for the company,” he said. “He knew how to market and grow business, and the hotel became so successful they had to add on.”

The Ramada became the Best Western Ramkota in 1986, and The Ramkota Companies experienced significant growth during the 1980s, including the Oasis Inn in Oacoma.

“That was the first model they had done that was select service, with rooms only, and the idea of replicating that model led to the creation of Kelly Inns Ltd., and our ownership in Oasis became Kelly Inn,” Thimjon said.

The Ramkota Hotel in Pierre opened in 1987, bringing a much-needed place for state government-related travel and events.

The growth spurt continued into the 1990s, which brought the company into the Okoboji area with Arrowwood Resort.

In 1996, the company did a unique acquisition of the Park Place Hotel in Traverse City, Michigan, buying it from the Rotary Club of Traverse City.

That also was the deal that connected Ramkota with Sioux Falls-based WR Hospitality, owners of Minervas, when Sweet asked WR’s Paul VanBockern about managing a restaurant inside one of the hotels in St. Cloud, Minn., which became a Green Mill.

“It worked really well, so after that when we wanted a different food operator, WR came in owned half by the Minervas group and half by Regency Hotel, and then WR could bring in the Minervas name, so that’s why there’s a Minervas in Traverse City.”

That continues to be the approach with Minervas outside of Sioux Falls, where WR no longer has ownership.

The 2000s brought another strong decade of growth, including the acquisition of the ClubHouse Hotel system from Wyndham Hotels & Resorts Inc.

In 2008, the partnership was consolidated into one entity called Regency Midwest, and “it started with 15 or 16 hotels, with the idea of providing stability to investors to make distributions quarterly, which has worked well,” Thimjon said.

In 2006, Ramkota was awarded management of the lodges and concessions at Custer State Park.

That task fell to Josh Schmaltz, who is now Ramkota’s president.

The Harding County native began with the company at a Radisson in Fargo while attending NDSU, starting in banquet setup and then promoted to director of catering and then front office manager. After graduating, he moved to Topeka, Kansas, and was the general manager of the ClubHouse Hotel.

Wanting to return to western South Dakota, Schmaltz was given the opportunity to become the general manager of the Ramkota Hotel in Rapid City. When the state of South Dakota awarded The Ramkota Companies as the concessionaire of Custer State Park, he made the move to director of operations of Custer State Park Resort.

“We were awarded the contract in October, and by the time the resort opened in April, 100 percent of the bathrooms had been redone in all the cabins,” Thimjon said. “How Josh got that done still amazes me.”

And around the same time, Ramkota partnered with Equity Homes of Sioux Falls to create Bridges Bay at Okoboji. Equity handles the owner-occupied real estate while Ramkota runs the hotel side of the business.

In 2010, a national association meeting of state parks directors was held at Custer State Park. It introduced the Ramkota team to contacts from around the country and led to a new venture.

“The state of Ohio really liked what we had done with Custer State Park,” Schmaltz said. “So we began managing some of their state parks and by 2018 had grown that to eight lodges and a marina, and we were just awarded a new contract by the state of Ohio for a new state park lodge they’re building.”

Next generation

By the latter part of the past decade, the families who had been original Ramkota investors in 1965 were looking for a liquidity event.

“They had owned it 52 years, and most of the families were into the next generation, so we decided to do an ESOP (employee stock ownership plan) and ended up with 100 percent of the shares,” Thimjon said.

“The hotels are debt-free, a lender made a loan secured by the hotels to buy out the shareholders, and the shareholders took a note for the remainder to be paid quarterly over the next 25 years.”

Shares began to be distributed to 134 employees in 2017, and it has grown since then. Eligible employees must be over age 21, work at least a year and work at least 1,000 hours and be an active employee as of Dec. 31. Shares can be cashed out when they turn 65.

“We think it really establishes us as an employer of choice in this industry,” Thimjon said. “Telling that story to our employees has been rewarding, and we know some are just beginning to understand the implications of ownership for them later in their careers.”

Navigating 2020 and beyond

As fate would have it, Schmaltz and Thimjon were just wrapping up a meeting with the trustee and their consultant who establishes valuation of the ESOP shares in March 2020, when everything in the industry was sent into a state of upheaval because of the pandemic.

“We gave them a tour, everything was looking great, we went to a board meeting, took them to the airport, came back, and the world had changed,” Thimjon said.

Tournaments and events scheduled for that weekend began canceling in rapid succession. Hotels that were supposed to be 90 percent occupied or more were left all but empty.

“We were bleeding money before PPP (the Paycheck Protection Program). Without that, we wouldn’t be here today,” Thimjon said.

“The community banking sector in South Dakota and its lenders are phenomenal. Those lenders who helped us through the COVID situation and the community banks behind them just did an amazing job.”

The Ramkota properties now are at a point where “fortunately we were able to weather it,” he continued. “Now what we talk about is that we made it to the other side. We think we’re near the shore. We can see the shore on the other side.”

The company was just wrapping up a multimillion-dollar renovation of the Best Western Ramkota at 3200 W. Maple St. when the pandemic hit.

The hotel’s 223 guest rooms were torn down to the shell and completely redone with new furnishings and fixtures. About 60,000 square feet of meeting space was totally renovated, including new carpet, lighting and audio-visual upgrades.

The pool areas were freshened up, and the on-site restaurants were updated.

The rooms are now filling up again, with sold-out weekends that began in March and haven’t let up.

“It’s been a challenge every day, but things are very strong,” Schmaltz said. “We’re starting to get a clearer view of the future. And some places, like Custer, have never let up. It had a phenomenal year in 2020, and all signs are that will be the case again in 2021.”

Ramkota is “absolutely in growth mode,” he continued.

At a recent board meeting, discussions mostly centered around growth opportunities.

What a difference a year – even six months – makes.

There’s an expansion coming to The Lodge at Deadwood. One that was on track to start at the ClubHouse Hotel & Suites in Sioux Falls pre-COVID is back in the planning stages.

“And we talk to brokers daily about potential acquisitions,” Schmaltz said. “There are going to be opportunities out there because unfortunately not everyone had the same experience over the last year that we did.”