National Park Service Commercial Services, Entrance Fees and Business Planning

1. National Park Service Commercial Services, Entrance Fees and Business Planning Presented by Anne Altman September, 2019

2. Agenda • NPS Commercial Services • NPS Recreation and Entrance Fees • NPS Business Planning

3. Types of NPS Commercial Contracts Concession Contracts Commercial Use Authorizations Leases

4. NPS Commercial Services Program at a Glance $1.5 Billion in Concessioners’ Gross Receipts Approximately 480 contracts Approximately $120M in Franchise Fees • 21% Lodging • 16% Food and Beverage • 17% Merchandise and Retail • 32% of contracts generate 97% of gross receipts • 64%of contracts are under $500K in annual gross receipts • 7.9% Average franchise fee on all contracts

5. Concession Contract Revenue by Visitor Service

6. NPS Commercial Services Program at a Glance Approximately 25,000 Concessioner Employees Approximately 5,000 Commercial Use Authorizations Approximately 120 Leases • Many work for the summer season only • NPS received $1.5M in cost recovery charges • NPS receives rent from these leases

7. Concessioner Income Trends

8. NPS Franchise Fee Revenues

9. NPS Concessions Definition • Concessions contracts are issued for services determined to be “necessary and appropriate” to occur within a park • Most contract operations happen entirely within a park (hotel or restaurant) but some contract operations start and end outside a park (river rafting trip) • Concessioners establish multi-year relationships with parks and pay a franchise fee % of gross receipts to the NPS • Concession contracts have headquarters oversight, and concession prospectuses are issued by a regional office, not a park

10. Concessions History • 1872 – US Congress established Yellowstone National Park • 1916 – US National Park Service created • 1950 – First official guidelines for NPS concession operations • 1965 - Congress passed the Concessions Policy Act • 1998 – Congress passed the Concessions Management Improvement Act

11. Differences between 1965 and 1998 Laws

12. Real Property Compensation • Concessioners are entitled to the amount of money put in, plus new construction, adjusted by the US Consumer Price Index, minus depreciation • The compensation is paid by the successor concessioner to the outgoing concessioner • Most contracts allow the NPS to “buy down” the obligation with US government funds if available

13. NPS Concession Oversight Responsibilities • Determines what services to put in the contracts • Approves the rates that concessioners can charge the public • Conducts reviews of operations and maintenance of facilities • Conducts reviews of contract compliance, financial activities • Receives concessioner financial reports to understand what is going on with the operations • Evaluates quality of visitor facilities, goods & services • Evaluates concessioner health, safety, risk management, and environmental programs

14. NPS Evaluates Offers for Concessions on the same Criteria • Concessions law defined the questions asked in the concession prospectus • Protection of park resources • Ability to provide the required visitor services at reasonable rates • Experience in providing the services • Financial capability • Proposed franchise fee • Secondary selection factors based on unique or specific park needs • The money received is less important than protecting the park and providing services to visitors

15. What does the NPS spend franchise fees on? Each park keeps 80% of its revenue, and 20% is retained by headquarters for national needs • Writing concession prospectuses (Request for Proposals) • Repaying real property improvement investments • Concessions related needs such as concession facility improvements • Visitor services and resource management programs • Park operations

16. NPS also ensures buildings are maintained • Many NPS concession contracts require money be set aside for maintenance and repair • NPS monitors those accounts to ensure they are spent correctly • This eliminates NPS funds needed later but lowers the amount collected as franchise fees

17. Commercial Use Authorizations • Commercial Use Authorizations are issued for services determined to be “appropriate” within a park, but not “necessary” • CUA permits are issued for 1-2 years and have no right of renewal • Most CUAs are for operations that start and end outside the park • Parks determine what visitor services are authorized under concession or a CUA based on the specific park conditions • CUAs are usually not competed • CUAs are approved and managed by the park, not headquarters

18. NPS Leases • NPS did not have full leasing authority until 2002. • NPS can lease buildings that are considered “surplus” for park operations to tenants for commercial use • Leases are not to be used when a concession contract is appropriate • No visitor services that are necessary within a park • 100% of lease money stays with the park and must be used for maintenance and upkeep of facilities

19. Key Lease Terms • Leases can be issued for up to 60 years • The lessee must maintain the buildings • Rent is a % of revenue or a straight $$ amount • The NPS does not review or approve pricing or evaluate the lessee’s operations • The lessee is not entitled to compensation for capital improvements, but the cost of them is factored into the rent paid

20. Questions?

21. Agenda • NPS Commercial Services • NPS Recreation and Entrance Fees • NPS Business Planning

22. NPS Recreation and Entrance Fees

23. History of Recreation Fee Funding • In some parks, fee collection started before 1916 but funds were returned to the US treasury • In 1996 the US Government tested the idea that entrance fees, if kept at the local site, would be able to help run parks • 80% of funds are retained at the park, and 20% remain at headquarters for national priorities • The law that allows the collection of entrance fees also covers other lands management agencies such as the US Forest Service and the Bureau of Land Management

24. Entrance Fee Rates are Set Nationwide • Parks are organized into tiers, and then standard prices are set for: • Weekly entry per car ($15-$30) • Individual entry ($7-$15) • Motorcycle entry ($10-$25) • Annual entrance to one park ($30-$60) • Commercial entry – such as for a tour group

25. Entrance Fee Rates are Set Nationwide The NPS also sells annual passes to all federal land sites – currently $80 The public comments on price increases before they are implemented

26. Discounted Entrance Passes • Free Passes • US military personnel • US 4thgraders – Every Kid in a Park • Americans with disabilities • Volunteers with 250 or more hours to National Parks • Discounted Passes • US Senior citizens - $80 for lifetime, $20 for annual pass

27. Benefits of the NPS Fee Program • 80% of fee revenue stays at sites where it is collected • Fee revenue is separate from revenue from Congress • Fee revenue is used primarily to enhance the visitor experience • NPS works with its partners to leverage fee dollars for projects

28. Recreation Revenue in the NPS

29. NPS Fee Program Expenditures • 55% of all recreation fees must be reinvested into facilities • NPS parks must also cover the cost of collecting the fees, which is tracked closely • Parks may spend the remainder of fee money on projects and staff related to visitor services • NPS adjusts the 80%/20% split if parks cannot spend their money

30. 2017 Fee Program Expenditures

31. Reservations for NPS Sites The NPS participates in a government wide reservation system called recreation.gov

32. Questions?

33. Agenda • NPS Commercial Services • NPS Recreation and Entrance Fees • NPS Business Planning and Internships

34. Business Planning in Parks • NPS invests in strategic thinking for its operations • Data driven decision making • Getting away from “I think” to “I know” • Being able to respond to questions from Congress and other officials • Recruiting more business graduate students into parks

35. Business Plan Internship • Created in 1998 as a way to introduce graduate students to the NPS and to accomplish business work in parks • Parks needed business plans to explain their financial picture • Most current analyses are more targeted • Examples: Workforce planning, reallocating resources, or strategies for commercial services • In the summer of 2019, NPS hosted 16 students in 8 parks • Many students pursue careers in the NPS after graduation and are given advantages in hiring

36. The NPS Business Plan Internship at a glance 21 196 140 48 \ years and running projects parks and programs supported alumni served in the NPS System-wide impact Practice areas NER Park-wide Business Planning Business strategic initiatives Commercial Services Analysis 35 8 AKR 42 MWR 11 8 20 41 WASO NCR Workforce Planning Targeted Operational Analysis Resource Sharing Assessments IMR 31 PWR SER 36

37. Questions?

38. Acknowledgements This presentation is a product of the NPS Business Management Group. Overseen by the NPS Deputy Director for Management and Administration, the Business Management Group (BMG) works to increase understanding of NPS data sources and planning process, to improve data-driven analysis and decision making, and to strengthen operational effectiveness across all levels of the Service. The BMG accomplishes this mission by providing direct management consulting and training services, developing and implementing analytical tools such as the NPS Scorecard and the NPS Workforce & Budget Planning Toolkit, and recruiting and matching talented, data-savvy graduate students with opportunities in high-need areas across the Service through its Business Plan Internship (BPI) program. For more information, please contact Jason Gibson at jason_gibson@nps.gov. Presentation Author Anne Dubinsky Altman, Management Analyst Anne_altman@nps.gov Acknowledgements