The privilege of operating lodges, cafes and other businesses in national parks will cost more from now on, Interior Secretary Manuel Lujan Jr. said Thursday.
He announced the change after studies showed such businesses have reaped huge profits while the parks themselves have amassed a billion-dollar backlog of needed repairs and upgrades.For example, an Interior Department inspector general report said that in 1988, concessionaires reported $500 million in gross receipts - but the government's share was just $12.5 million, or 2.5 percent.
However, Utah's largest concessionaire - TW Recreation Services, which operates in Bryce Canyon and Zion national parks - said its contracts already make it pay more than most.
In fact, Lujan says TW's contracts - at least the one it has for Yellowstone - should be the model for the government to follow as it negotiates other contracts when they come up for renewal.
TW pays 22 percent of its Yellowstone revenues to the government - the highest rate in the nation. The average concessionaire pays 10 times less - only 2.5 percent - and the concessionaire in Yosemite National Park pays only 0.75 percent.
TW Vice President and General Manager Steve Tedder said TW pays roughly 15 percent to 17 percent of its Bryce and Zion revenues to the park service through fees for royalties, building use and maintenance and capital expenditures to improve government-owned facilities.
He adds that most concessionaires pay much less because they own their own facilities - not like the government-owned facilities in Yellowstone, Bryce and Zion - and they merely pay royalties.
Lujan said at a press conference that his policy changes "are designed to increase revenues to the parks, to improve services to park visitors and ensure a fair return."
He added, "What was wrong is that the fees have been too low. Who was losing out? Well, I view it was the investment back into upgrading the parks."
Lujan added that the change in policy should not increase costs to visitors, merely "remove excess profit" from concessionaires.
But he said he will also seek reforms to increase competition among concessionaires, especially because 28 of the last 29 contracts renewed only had one bidder.
Among those plans are giving concession contracts for only five years instead of up to 30; no longer allowing incumbent concessionaires to remain by merely matching bids of others; and stopping policy that allows incumbents to artificially inflate the value of their facilities in negotiations.
That inflation made it difficult for competitors to purchase facilities and bid. Lujan wants only the "book value" of the facilities to be allowed in such transactions from now on, but may need congressional approval first.
Lujan said the park service will also use outside consultants to analyze concessionaires' financial statements, appraisals and other documents in negotiations, which had been conducted by local park officials with little financial background - according to inspectors' reports.
Tedder said agreements between TW and the park service could also be a model of working together to improve facilities.
He notes that in the past year, TW finished renovation of lodges at Bryce and Zion. It also recently demolished older cabins and replaced them with new motels in both parks, which will be amortized over 20 years, then become government property.
Lujan said the new policy would allow concessionaires to still make a reasonable profit and provide quality services - even if that means they will not pay the 22 percent that TW does in Yellowstone.