Month: June 2010

Customer Feedback on Private Management

Got the letter from a customer of a US Forest Service park we operate.  I know the last paragraphs almost looks like a setup but we honestly got this letter out of the blue from a customer no one here knows.

Seasonal Closures

One of the key strategies for making ends meet in recreation is seasonal closures and/or service reductions.   With only a few exceptions (San Diego, maybe?) most parks have strong seasonality.  Here is one example that caught my eye in the news:

Two western Kentucky lawmakers say they don’t support plans to close resort parks two days a week in the winter and privatize restaurants and golf courses.

“Rather than shutting down the parks for two days, they should be promoting them to increase business,” Rep. Will Coursey, D-Benton, said. “It sends the wrong message.”

Let’s make sure we are clear on this — They are talking about closing Tuesday and Wednesday in Kentucky in the winter time, which (if you are not from the area) is typically cold and rainy.

My company runs several enormously popular parks in Western Kentucky for the US Forest Service.  They are so popular we have lines and wait lists in the summer to get in.  But we don’t even try to keep the place open from November 1 to March 15, and even then the dropoff we get in the late and early season is substantial.

I am not that familiar with these parks in the article, but I would have to take a good long look at them to see if I would support keeping them open in the winter at all, much less 5 days a week. I am currently looking at a resort type public park in Georgia with a lodge, and the cost of keeping a resort and restaurant open in the winter when there is no business is simply astronomical.

But let’s consider the lawmaker’s suggestion for a moment.  I am a marketing guy.  You ask me to do something to fill up a cold, rainy western Kentucky resort on a Tuesday and a Wednesday during the school year.  How?  I am sure you could hire someone who would gladly take your money for this project, but what possible chance of success does it have?  Who is going to go when their kids are in school to spend two mid-week days in a cold and rainy resort? In the Georgia example I am looking at, there is nothing one can do to reasonably get occupancy high enough even to break even — the mid-week and winter off seasons are too much of a drain if the lodge remains open during these slow times.

The only possibility is selling to the business meeting market, to try to get businesses to come in.  This is a tough sell anyway, particularly in this area of the country, but it also requires some minimum facilities.  Small lodges don’t work well, and there needs to be good meeting space, good A/V and internet infrastructure, and  catering capability.  And even if all this capability exists, there will not be meetings all the time and the rest of the time the costly capability will just sit unused, burning money.

Which leads to another inherent problem with government management of recreation — their labor force tends to be both expensive and, more importantly, inflexible.  One reason they cannot just shut down for the winter is that it begs the question, what do we do with all of our salaried staff?  One reason companies like mine can offer such large cost reductions without sacrificing service is that our labor force is enormously flexible.  I have mobile employees (in RV’s), some of whom want year-round work and some of who only want seasonal work.  This allows us to match staffing to demand better, so we don’t pay a 30 person staff in the winter to sit around looking at empty parks.

Oh, and I thought this was funny, from the same article:

“I agree with Will on the closing, and I’ll have to hear a lot of discussion on privatizing the golf courses before I could support that,” Cherry said. “If they’re privatized, it means a profit for someone. The state may have to make changes in procedures so that it earns the profit.”

A couple of thoughts.  First, of all the different kinds of public parks, is there any type with a more proven track record of successful private management than golf courses?

Second, God forbid anyone make a profit.  I am sure the state is losing money on the operation, so why do they care if someone makes a profit if their loss goes away and the golf course remains open to the public?

Third, this just shows lawmakers again talking without any knowledge of the subject.  All private management deals include rent payments back to the state, so whether the private entity makes money or not, the state is going to convert a current loss to a gain via rent payments.   In effect, private cost reductions and performance improvements result in additional surplus, and that surplus is split with the private company retaining some as profit and paying some out to the state as rent.  Win-win.

Keeping New York Parks Open

I did a video for a New York group on how public-private recreation partnerships work, and why they can help to keep state parks open.  While the presentation is nominally to a New York audience, the presentation could apply to any state.  The video is below, and also at this link.