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Key Concessions Contracts Up At Yosemite National Park, Along Blue Ridge Parkway

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The Ahwahnee Hotel in the Yosemite Valley is one of the prizes in the concessions contract for Yosemite National Park/Kurt Repanshek

The coming months could tell whether Xanterra Parks & Resorts and Delaware North Companies Parks & Resorts are both still in an acquisition mode, or will look to stand pat, as concessions opportunities are weighed in Yosemite National Park and along the Blue Ridge Parkway.

In Yosemite, the National Park Service is seeking bids for the chance to operate The Ahwahnee and other plum lodging, dining, and recreation operations for the 15 years beginning in 2016. Along the Blue Ridge Parkway, the agency is seeking a business partner to operate lodgings and dining operations at Rocky Knob Cabins near Milepost 168 and the Otter Creek restaurant and gift shop at Milepost 60.8.

Xanterra last year pulled off a coup by landing the concessions contract at Glacier National Park over long-time operator Glacier Park Inc., and also renewed its contract at Yellowstone National Park for 20 years. In addition, the company of late has been cementing its position in the outdoors, having acquired both Austin Lehman Adventures (now known simply as Austin Adventures) and Vermont Bicycling and Walking Tours in the past nine months. Going after the Yosemite contract would be expensive, particularly in the wake of Xanterra's new contract at Yellowstone that calls for an investment of roughly $135 million there. But Yosemite would be a nice addition to Xanterra's portfolio, which also boasts lodging and dining operations at Grand Canyon, Death Valley, Zion, and Crater Lake national parks.

Yosemite National Park, a jewel in any concessionaire's portfolio, has been held by Delaware North for many years. The company, which also manages concessions at Sequoia and Kings Canyon national parks, has been expanding its footprint in the parks recently, adding the lodging at Shenandoah as well as the Peaks of Otter Lodge along the Blue Ridge Parkway since the beginning of 2013. The company also has expanded its lodging holdings in West Yellowstone, Montana, operates lodges in Olympic National Park, and has retail outlets in Yellowstone and Grand Canyon national parks.

With Delaware North's acquisition of the concessions business at Shenandoah and Peaks of Otter Lodge, it will be interesting to see whether the company pursues the other Blue Ridge Parkway properties, although the operations are small. However, also up for bid is the contract to the Pisgah Inn located along the Parkway to the south of Asheville, North Carolina. That operation, with 51 guest rooms and a restaurant, might interest the company.

Also to be determined is how aggressive ARAMARK Parks and Destinations might be. The company lost the Shenandoah contract and that to the Kalaloch Lodge in Olympic to Delaware North. ARAMARK does operate in Denali, Mesa Verde, Glacier Bay, and elsewhere in Olympic (Lake Crescent, Log Cabin Resort, Sol Duc Hot Springs), and at Glen Canyon National Recreation Area.

Otter Creek Facilities Review

The Otter Creek restaurant, gift shop and campground (MP 60.8) are located on Otter Creek, approximately 20 miles from Lynchburg, Virginia. The restaurant and gift shop facility at Otter Creek was designed as a modern board-and-batten frame building with traditional Southern Appalachian features such as a long porch across the front, a jerkinhead, or clipped, gable roof, and a stone chimney. The facility opened for business in May, 1960. Site stabilization of an area just behind the restaurant was also accomplished as a part of the restaurant building improvements that occurred during the spring of 1999. A montane oak-hickory forest is the principal plant community surrounding the restaurant.

Historically, the 3,190-square-foot facility was operated as a restaurant and gift Shop. The facility was open from May through October, serving breakfast and lunch. As it was configured, the dining room seated 57. The gift shop sold gifts, souvenirs, sundries and firewood. The facility has been closed since the end of 2010.

The adjacent, 69-site, Otter Creek campground, opened in 1960 with a small amphitheater established in 1962, is operated by the NPS, but was offered as a concession operation in the 2012 prospectus. Interested parties could improve and rent campsites, or have the opportunity to rent camping gear. Appendices to this RFEI contain additional information about the facilities.

Rocky Knob Facilities Overview

The Rocky Knob Cabins, a small, secluded complex of seven housekeeping cabins, a manager's house, and a shower/bath house is located near Floyd, Virginia. These historic structures constructed in 1941 by the Civilian Conservation Corps. First developed as "trail lodges," the cabins were remodeled for use as family housekeeping units in 1950. Six of the cabins include a bedroom and kitchen. The seventh cabin is ADA accessible and includes private bathroom in addition to a kitchen. Each cabin is 418 square feet. The 960-square-foot manager's house includes a bedroom, living area, kitchen, bathroom and office. The 792-square-foot shower house has men's and women's bathrooms and showers, and a laundry room. The cabins were historically available for rental May through October. The cabins have been closed since the end of 2012 due to lack of a concessionaire.

At Yosemite, the concessions contract would cover all lodging, dining, and retail shops in the Yosemite Valley, as well as the lodging operations at White Wolf, Tuolumne Meadows, Wawona, and the High Sierra Camps. The recreation businesses in the contract include the Badger Pass ski area and guide services for the mountaineering, nordic instruction, and ski school operations. Park Service officials estimate that if a company other than Delaware North landed the new contract, it would cost that company $32 million (in 2016 dollars) for "personal property, inventory, supplies, start-up costs (staff hiring, training, etc.) and working capital." Additionally, another $22.5 million would be owed Delaware North for "personal property such as furniture, trade fixtures, equipment, and vehicles," and an estimated $6.5 million for existing inventory. 

Start-up costs for a new concession are estimated at $3 million, and another $3 million would be needed to address deferred maintenance in park facilities run by the concessionaire.

The new concession contract is scheduled to begin on March 1, 2016, and will be issued for a term of 15 years. This is the park’s primary concession operation and the largest concession contract in the National Park System.

Comments

Sara, Another example of too much government interference. 


It is legislatively mandated that NPS have rate approval for concessioners.  See section 406 of the National Park Service Concessions Improvement Act of 1998.

http://www.concessions.nps.gov/docs/OMNIBUS1998.pdf

 


The lodges in the National Parks were built by railroad/business magnates with old money. They were built for wealthy easterners on thier vacation. The idea that 'the parks are for the middle class' did not come about until the 1950's, well after these lodges were built. Those middles class families were pitching tents, and as far as I am aware of, the middle class has never been staying in the Ahwanee.

I am far more upset about paying an entrance fee to get in the park then I am about a concessionaire pricing me out of a hotel that is in my opinion the antithesis of a Yosemite Valley expirience


I don't know all the details, but if prices are strictly based on some cost plus basis related to some national formula (a very bureaucratic way of seeing the world), it seems that it would have the following implications:

 - no incentive for the concessionaire to lower costs.  On the contrary, the higher the cost, the higher the revenue

 - additional costs of complying with all the various margins based on bucketing producst according to a government matrix

 - weird prices where beer is cheap and ice is expensive (as per the link given before)

On the other hand, if we simply let the concessionaires sell at whatever the market would bear, there would be cost optimization to maximize profits.  The NPS should just then collect a portion of the profits.  It'd be more efficient than coming up with a 4 page list of product and allowed margins. 


Dittos on Rick's comment Alfred Runte, I appreciate your posts and think you are right on. We are bombarded by money transactions, bottom line is all that matters. It has become an obsession even in NPS management levels. I think even Alan Greespan is having second thoughts

about the teaching of the Chicago School of Economics (the Chicago Boys).  


So, what do you mean by "...let the market play out...", Zeb?


Sara,

This is fascinating.  So, somebody at the concessionnaire has to figure what they buy and kind of mark up they're allowed on each product.  That seems silly.  It'd probably more efficient to let the market play out and have the NPS take its cut.


I think the answer of why that 1.5lb of hamburger cost $16.27 at Mesa Verde can be found in this NPT article by Kay and David Scott:

/2012/05/pricing-convenience-items-national-parks9837

This is NPS's most recent markup bulletin:

http://www.concessions.nps.gov/docs/concessioner%20tools/2014%20Convenie...


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