Not always a walk in the park: managing hotels on federal land involves different set of rules

NATIONAL REPORT -- For hotel operators, effective yield management is essential to maximizing revenues. But for lodging companies running properties in national parks, conventional sales-generating methods don't come into play at all. In fact, running national park hotels is far from conventional.

"We can't run yield management programs. Our rates are set by the government," said Judi Lages, v.p. of sales and marketing at Xanterra Parks & Resorts, a park management company.

Xanterra has contracts to run 24 National Park Service hotels, as well as retail and food and beverage outlets in national parks, including Yellowstone, Death Valley, Grand Canyon, Everglades, Crater Lake, Zion and Mount Rushmore.

Protecting and serving

"A lot of people are surprised that hotel rates [in national parks] are approved by us," said Scott Gediman, chief of media and external relations at Yosemite National Park.

"The rationale is that the [NPS's] purpose is to preserve and protect parks and make sure visitors are not exposed to exorbitant prices," said Gediman, who works closely with Delaware North's DNC Parks & Resorts at Yosemite to develop promotions.

Before setting room rates, each hotel concessionaire submits proposed rates for the upcoming year. These rates take into account rates at comparable properties in the area, as well as rates at similar hotels in other national parks, said Gediman, who also is a park ranger. Those rates are then locked in for the year, regardless of whether competing hotels outside the parks raise their nightly prices.

"We can go down on rates [in the slower season], but we just can't go up," Lages said.

The NPS also approves restaurant menus and prices, hotel renovations and even marketing materials. In essence, national park hotel operators are franchisees of the U.S. government. Park hotel-iers, for example, don't own the land the hotel is located on. Instead, they pay a franchise fee to the NPS, said Jo Pendry, chief of the concessions program for the NPS.

This fee can range from 17 percent to 19 percent of yearly revenues, said Kerri Holden, a spokesperson for DNC Parks & Resorts at Yosemite, which operates eight hotels and campgrounds in the park.

It's all worth it, particularly because hotel concessionaires operate the only lodging facilities at national parks, where thousands of tourists flock every year. It's the best marketing machine out there, Holden said.

The NPS has 600 contracts with vendors, ranging from mule packing companies to river runners to hotel management companies. About 8 percent of these contracts are with lodging companies, said Pendry, adding that Xanterra, Aramark Corp., and Delaware North are among the largest lodging concessionaires.

Like any franchise company, the park service has operational and maintenance plans that they're required to follow, she said.

Holden said a lot of detail goes into running the Yosemite properties, ranging from the upscale historic Ahwahnee Hotel to no-frills campgrounds. Any changes, even small ones, must be approved by the NPS.

"If we want to put an Internet kiosk in one of our properties, we have to get that approved," Holden said. "All the processes we have to go through are just amazing."

This is done for a reason: The NPS and the hotel concessionaires have a vested interest in selling an environmentally friendly experience. "The National Park Service wants to make sure we offer visitors what they want," Holden said.

Mule service

Although park hotel management companies may not be watching profits soar, they work diligently to offer travelers a memorable experience at the hotels and parks, Lages said.

"You can't be greedy, you have to work hard and you have to deal with challenges that would make traditional operators cringe," she said.

For example, imagine having to send every towel, sheet and dish via mule down to the 11-cabin Phantom Ranch at the bottom of the Grand Canyon--the only lodging facility below the canyon rim. Yet, that's part of what goes into operating a hotel in an area not accessible by car. It's also part of the tremendous appeal of Xanterra's rustic Phantom Ranch, which books up 23 months in advance.

The NPS issues contracts for 10 to 20 years for hotel management companies. When the contracts expire, the hotel companies can bid again or decide not to bid at all. In turn, another operator can be selected to assume management, Pendry said.

If the former long-time hotel operator is not awarded a new contract, it is entitled to a pay-out fee from the new concessionaire. This fee takes into account the fair market value of the property, capital improvements and depreciation, she said.

This unique business model might sound confusing, but for hotel operators who have been in the parks management business for decades, this goes along with the privilege of running hotels in some of the country's most spectacular natural settings, Lages said.

"We are devoted to the environment and we truly believe it is our job to protect these park treasures for future generations," she said.

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