12/11/2006 by Paul Lundgren

When senior executives from Lutheran Brotherhood and the Aid Association for Lutherans got together in Northwest Wisconsin to negotiate their merger in 2001, there was no discussion about buying the conference center near Trego, where they finalized their deal. But five years after the merger that created Thrivent Financial for Lutherans, the Fortune 500 financial services nonprofit did just that.

In October 2005, North Meadow Investment, Ltd., a for-profit real estate development subsidiary of Thrivent Financial Holdings, Inc., purchased the Marvin M. Schwan Retreat & Conference Center. Eight months later, they renamed it Heartwood Conference Center & Resort.

Tim Schwan, Thrivent’s vice president of church and community affairs, said the company does not intend to expand into the hospitality industry, but sees a unique opportunity with Heartwood.

“There’s a dual purpose,” he said. “It’s an investment, but it’s also a facility that we knew could help us build and strengthen our ties with the Lutheran community.”

Thrivent Financial for Lutherans is the largest fraternal benefit society in the world, with 2005 revenue exceeding $6 billion.

Serving Thrivent affiliates and other Lutheran groups will not be the largest part of Heartwood’s business, however. Dana Popple Morlock, sales and marketing manager, said a new campaign is underway to promote corporate retreats, family getaways and weddings, which she expects will make up about 75 percent of the clientele.

She wouldn’t disclose financial details but said revenue increased substantially in the first year under Thrivent ownership. Expansion options being discussed include a restaurant, pool/spa, or a hotel building to accommodate larger groups.

Scott Arndt, Heartwood’s assistant manager, said discussions are underway with the Minneapolis office of the Leo A. Daly architectural firm. In 2005, Engineering News-Record ranked the Omaha-based firm No. 12 on its list of the top U.S. design firms with more than $162 million in revenues.

Heartwood has a staff of 26, all employees of Flik Conference Center

Management, headquartered in Rye Brook, NY. According to its Web site, Flik manages 13 properties across the United States, including the Earl Brown Heritage Center in Brooklyn Center, MN, its only other Midwest client.

“I think the long-term strategy is to have (Heartwood) managed by people who know the industry, which is not a core competency of Thrivent,” Schwan said “Flik has been a great partner so far.”

Compass Group connection

Flik International Corp. is owned by Compass Group, PLC, a $23.5 billion UK-based food service company. Fortune magazine recently named it the world’s 12th largest employer.

Compass Group’s reputation is tarnished by a corruption scandal involving another subsidiary, Eurest Support Services. It’s accused of bribing United Nations officials to maintain food contracts valued at more than $200 million. In November 2005, Compass terminated three executives in association with the alleged fraud. CEO Michael Bailey stepped down in June, though he wasn’t implicated.

Background

Thrivent acquired Heartwood from Bethany Lutheran College, a private Christian school in Mankato, MN. The center had been named after Marvin Schwan, the founder of Schwan Food Co., a Marshall, MN, business made famous for its delivery of frozen foods and dairy products. Schwan’s Sales Enterprises’ international and domestic sales exceeded $2 billion when Marvin Schwan died in 1993. He had established a reputation in the 1980s as Bethany’s most significant benefactor, though he sought to avoid publicity for his philanthropy.

Daniel Mundahl, the college’s chief financial and administrative officer, said Bethany used part of the proceeds from a charitable trust left by Schwan to acquire the land near Trego in 1998 and build the conference center in 2000.

The 700-acre property, located 11 miles west of Minong, about a mile off Highway 77 on Hoinville Road, surrounds two private lakes and is bordered by the nationally protected Namekagon River. It had been owned for many years by an Illinois Boy Scout association, which used it as a camp. Five Boy Scout cabins were built on the west side of Hoinville Lake that have been renovated and are still in use by Heartwood. Today they are called the Wild River Cottages.

Mundahl said the Boy Scouts sold the land to a private owner before Bethany acquired it. He declined to disclose Bethany’s original purchase price, construction costs or selling price.Thrivent’s Tim Schwan also declined to disclose financial figures. For the record, he also notes that his family is not related to Marvin Schwan, and jokes the new owner doesn’t “even get a price break on the ice cream.”

Mundahl said Bethany was unable to utilize the facility as often as it hoped. He said the expectation was that groups from the college would use it about twice as much as the general public, but when the opposite became the reality the college began developing an exit strategy.

Schwan said Bethany approached Thrivent and made a “compelling case” for the sale.

“They were very interested in finding someone to take it over that would ensure that the Lutheran community would still be able to make use of it,” he said. “Our corporate headquarters is in Minneapolis and our operation center is in Appleton (WI), so to have it available to our employees for their teambuilding and training and retreats was valuable. We also saw it as a place Thrivent members in the northern part of the country may want to use.”

Heartwood offers a 25 percent discount on overnight lodging rates to Thrivent members and “key community nonprofit organizations.”

Heartwood’s regular rates vary from $240 per night in its Pine Village Duplexes during peak season to $95 per night in its Eagle Lodge Guestrooms during the off-season.

There’s a misperception the resort and conference center isn’t open to the general public, though it always has been. Under Bethany ownership, it enjoyed a core clientele of Lutheran groups but did not aggressively court outside business.

“We’ve been Northwest Wisconsin’s best kept secret,” Popple Morlock said. “That’s going to change.”

Growing market

James Polinsky, general manager of Minnesuing Acres Executive Retreat Lodge and Meeting Center in Lake Nebagamon, said resort and convention center business is expanding, and there’s plenty of room in the market for Heartwood to grow.

“As long as they take care of their customers, they’re going to do just fine,” he said. “There’s been great growth in the executive retreat market from 2005 to 2006. It was a really good year nationwide.”

Polinsky said the U.S. market grew about 10 percent last year, and Minnesuing Acres exceeded that.

Like Heartwood, Minnesuing Acres was built with old money and is run by a large company. Its history begins in 1961, when it served as Curtis L. Carlson’s family getaway. Carlson founded Gold Bond Trading Co., a provider of consumer incentive programs, most notably trading stamps.

Gold Bond was renamed Carlson Companies in 1973, after expanding into the hospitality and travel industries. Today, its subsidiaries include T.G.I. Friday’s restaurants, Carlson Wagonlit Travel and five major hotel chains.

Minnesuing Acres separates itself by only allowing one group to use its facilities at any given time. “When you come to Minnesuing you get exclusivity,” he said.

Popple Morlock said Heartwood provides a similar atmosphere. She said the accommodations, which include two-bedroom lakeside cottages, four-bedroom duplexes, and hotel guestrooms overlooking Hoinville Lake, are spread out across the grounds so different groups seldom notice each other.

Polinsky hasn’t been to Heartwood since the Thrivant-Flik takeover, but said he doesn’t view it as similar to Minnesuing Acres. Its most direct competitor, he said, is Grand View Lodge, a golf resort and conference center in Nisswa, MN, near Brainerd.

“We’re more similar to Grand View than to Heartwood,” he said. “They don’t offer the wide range of activities we do, and they’re not quite as upscale as us from a service perspective and quality of food and beverage. But it’s a first-class facility. They’re good competition for us.”

Popple Morlock said food catering is one of Flik’s specialties.

Recreational activities at Heartwood include canoeing and row boating and sports like soccer, basketball, tennis and volleyball. In the winter there’s a sledding hill, an ice-skating and broomball rink and more than 20 miles of trails for cross-country skiing and snowshoeing.Heartwood also has wireless Internet connectivity and on-site meeting

planners. Its Eagle Lodge has 10,000 square feet of meeting, banquet and exhibit space for groups as large as 300. Its Pine Lodge has 3,000 square feet of meeting and dining space and can accommodate groups up to 150. Craftsman architecture and fieldstone fireplaces are featured throughout the property.

“It’s certainly not what a person would expect to find a mile and a half down a dirt road,” Popple Morlock said.

• UW Sustainable Management program exceeds expectations -8/10/2010
• The green office -7/27/2010
• Executive Profile: John Bastian, NewPage Duluth mill -4/29/2010
• Oh what can I wear to work? -4/20/2010
• Entrepreneur turned dealmaker -1/27/2010