Valdosta Daily Times

Features

June 23, 2013

Hot Springs National Park

New Leases on Life

(Continued)

- — National Park

Service Commercial Arrangements

Although nearly all commercial structures (stores, lodges, book stores, markets, studios, etc.) within national parks are government-owned, virtually none are actually government-operated.

The nine lodges in Yellowstone, all owned by the government, are operated by privately owned Xanterra Parks & Resorts. Lodges in Yosemite, including the upscale Ahwahnee are government-owned, but operated by Delaware North. The lodge and campground in Colorado’s Mesa Verde National Park are operated by ARAMARK.

Businesses bid against one another for the right to operate commercial enterprises within the national parks. For this right, they agree to pay the National Park Service a fee based on the revenue generated from the operation. The fee is essentially a rent paid for use of the facilities. Winning bidders may also be required to place funds in a reserve for maintenance and to undertake specified improvements. The contracts generally terminate in 10 years at which time bidding begins on a new contract.

Contracts in major parks such as Yellowstone, Glacier, Yosemite, and Grand Canyon are quite complex and require sophisticated bidders. As a result, large commercial enterprises in the national parks are operated by a small number of private firms that can afford to employ personnel who specialize in evaluating these contracts.

Long-Term Leases and Adaptive Reuse

Park management at Hot Springs is burdened with two major issues in its attempt to renovate the historic bathhouses. First, although exteriors of the nine remaining bathhouses are attractive and appear in good repair, interiors of the vacant buildings need extensive work that will require substantial sums of money the park doesn’t currently have. In addition, with two operating bathhouses in the national park and three operating hotel spas in the town, there is little need for one, let alone four or five additional bathhouses. The bottom line is the impossibility of attracting an investor that will put large sums of money into a business that isn’t viable.

The park is addressing these problems in two ways.

One offers long-term leases that permit a business or organization sufficient time to recover the large investment required to renovate a building. Ten-year terms that are standard for most National Park Service commercial contracts don’t work well in this park where large sums of money are required to bring a building into working order. One of the two operating bathhouses is in the early stages of a 55-year lease during which $3.5 million of private funds have been invested. Two other former bathhouses are being operated under long-term leases of similar length.

The second problem is addressed by allowing lessees to utilize the buildings for something other than bathhouses. This strategy, called “adaptive reuse,” increases the likelihood of attracting a business or organization that will agree to spend the money necessary to renovate a building. One of the former bathhouses has been converted under a 60-year lease into an art museum. Another former bathhouse, currently being renovated under a 55-year lease, is to become a brewpub and distillery.

The brewpub business is being spearheaded by Rose Schweihart-Cranson, a young, energetic entrepreneur who is spending $500,000 in the initial stage of interior preparation. The National Park Service had earlier spent nearly $1 million removing asbestos, bringing plumbing and electrical up to code, installing heating and air systems, and putting in sprinkler and fire alarm systems.

Under most National Park Service concession contracts, the concessionaire is required to seek park approval for products and services that are offered and the prices at which they are sold to the public. Long-term leases being used at Hot Springs National Park offer substantially more flexibility to the lessee. Schweihart-Cranson will be permitted to charge whatever price she deems fair for the beers and snacks she plans to sell.

In contrast, concessionaires at most parks are required to seek approval when establishing the prices for everything they sell. For example, the Yellowstone concessionaire must seek the park superintendent’s approval for the prices it charges for rooms at Old Faithful Inn and each of the other eight lodges in the park.

Hopefully, Hot Springs National Park will be successful in attracting businesses and organizations to occupy its remaining vacant buildings. Active tenants that spend their own money on renovations will permit park visitors to continue to appreciate the magnificent structures that were an important part of America’s past, even if the buildings are utilized for purposes other than offering spa services. Drinking a craft beer brewed with local spring water in a bathhouse once frequented by Al Capone sounds like an enjoyable evening.              

David and Kay Scott reside in Valdosta and are authors of “Complete Guide to the National Park Lodges” (Globe Pequot).  

 

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