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Public Use Recreation Cabin Program Financial Sustainability Strategy - TNF

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Public Use Recreation Cabin Program Financial Sustainability Strategy - TNF Public Use Recreation Cabin Program Financial Sustainability Strategy - TNF Context The Alaska Region of USDA Forest Service is seeking to continue to provide recreation opportunities through public use rental cabins on the National Forests. The Region currently has approximately 250 public use recreation cabins, about 150 on the Tongass National Forest and 100 on the Chugach National Forest; representing approximately one‐half of the developed recreation facilities in the Alaska Region. Increased cost of services and declining maintenance budgets threaten the Forest Service’s ability to provide all of these cabins. In February 2010 the Region hosted a public workshop for public and private partners to address how to move forward with a sustainable recreation program within the Alaska Region. One of the tasks from that meeting was to gain an understanding of the public use cabin program and the costs associated with delivering that program. Analysis In August 2011 Capital Hotel Management (CHM) was contracted to provide a financial analysis of the current situation on the Tongass National Forest and provide some strategies that could be used to increase the financial efficiency of the public use recreation cabins. CHM proposed a three step process resulting in recommendations for a portfolio strategy. The steps entailed gaining an understanding of the unique product, and its niche within the region, that the public use cabins provide to the recreating public; looking for options to expand market opportunities and finally, examining gaps between current (or baseline) operations and potential market opportunities. Based on this process CHM developed strategies for providing better economic efficiencies and an analysis of changes to the portfolio that might be undertaken. There are several important factors that must be used when interpreting the information. This was a snapshot of data from Fiscal Year 2010, and there may have been other changes in the delivery of the cabin program since then that will not have been included. This analysis looks at the costs associated with the public use recreation of cabins and so only presents one aspect to financially sustainable developed recreation program. Conclusions The report collected data and makes recommendations based solely on financial efficiencies, it was not intended as a decision document rather, it is a collection of data that can be used by line officers to make an informed decision regarding management of a program area. Public Use Recreation Cabins are one component of a sustainable recreation program, and need to be considered within this larger context. January 2013 Alaska Region Public Use Recreation Cabin Program Financial Sustainability Strategy – Tongass National Forest US Forest Service Alaska Regional Office Boston Chicago Los Angeles Miami New York Park City Washington, DC Page Intentionally Left Blank Tel 978.522.7000 Fax 978.522.7008 548 Cabot Street Beverly, MA 01915 www.chmhotel.com November 26, 2012 Mr. Eric Ouderkirk Alaska Region ARRA Program Coordinator USDA Forest Service – Alaska Region 709 West 9th Street Juneau, AK 99802 Dear Mr. Ouderkirk, We are pleased to present our Final Report on the Tongass National Forest Public Use Recreation Cabin Program for Financial Sustainability. This work has been completed under Task Order AG- 0109-D-10-008 under CHM IDIQ Contract AG-02NV-C-09-004. It has been a pleasure to be of service to the Alaska Regional Office and the US Forest Service. If we may be of further assistance, please do not hesitate to contact us. Sincerely, Capital Hotel Management Section 1 - Introduction Page Intentionally Left Blank Section 1 - Introduction Table of Contents 1. Introduction ....................................................................................................................... 6 1.1 Report Format .............................................................................................................................. 6 2. Goals and Objectives ........................................................................................................ 7 3. Understanding the Product ................................................................................................ 8 3.1 General Characteristics of Cabin Supply ............................................................................... 8 3.2 General Characteristics of Cabin Demand .......................................................................... 10 3.3 Revenue ...................................................................................................................................... 15 3.4 Current Operating Costs ......................................................................................................... 16 3.5 Industry Standard Estimated Operating Costs .................................................................... 23 3.6 Sub Conclusion – Understanding the Product ...................................................................... 25 4. Market Opportunity ......................................................................................................... 27 4.1 Competitive Market ................................................................................................................. 27 4.2 Comparable Markets ............................................................................................................... 35 4.2 Alternative Practices Observed in Market ........................................................................... 41 4.3 Desires of Alaskan Residents .................................................................................................. 42 4.4 Sub Conclusion – Market Opportunity .................................................................................. 46 5. Gap Analysis .................................................................................................................. 47 5.1 Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis .......................... 48 5.2 Strategies for Closing the Gap .............................................................................................. 49 6. Portfolio Strategy Analysis ............................................................................................. 52 6.1 Options Evaluated ........................................................................................................................ 53 6.2 Scenario Outcomes & conclusion ................................................................................................ 55 7. Appendix ........................................................................................................................ 57 7.1 Cabin Occupancy by Cabin ....................................................................................................... 58 7.2 Rates Applied by Cabin .............................................................................................................. 62 7.2 Maps by Cabin ............................................................................................................................. 68 Section 1 - Introduction 1. INTRODUCTION The purpose of this report is to provide an overview of the Tongass National Forest Recreation Cabins Program and the current and long-term sustainability of the system. Our research included information gathered from a week-long site visit, interviews, surveys, and desktop research on a wide-variety of cabin elements. The cabin program at the Tongass National Forest is comprised of approximately 150 public use cabins and is the second-largest contributor to recreation site fees at 20 percent of total fees collected. (Visitor centers are the largest contributor, averaging 63 percent over the 2005 to 2009 period.) These cabins are a key component of the recreation experience provided by the Forest Service and help to define the region’s recreational niche. Public users as well as US Forest Service employees are passionate about the cabin program and many wish to be engaged in the strategy development process. For these reasons, the purpose of this study is to analyze a wide range of variables within the cabin system and identify the current state of the program in regards to long-term sustainability as well as the potential future of the program and recommendations for improvement. The financial sustainability of the cabin program will be dependent upon the following: • the makeup and inventory of the cabins and their operating characteristics, • the physical state of the cabins and life of the assets, • the effort and cost required to maintain each cabin, • the effort and cost required to operate the program, • the current and projected demand for the cabins, and • the fees that the program generates and the appropriated funds available in comparison to the cost of maintaining and operating a sustainable program. 1.1 REPORT FORMAT The format of this report has been designed to be delivered in phases in order to communicate portions of our findings as they evolve. The report outline includes the following: 1. Introduction 2. Goals and Objectives for Recreation Cabin Portfolio Strategy 3. Understanding the Product 4. Market Opportunity 5. Gap Analysis 6. Portfolio Strategy Analysis 7. Appendix Alaska Region Public Use Recreation Cabin Program Financial Sustainability Strategy 6 CHM Government Services Section 2 – Goals and Objectives 2. GOALS AND OBJECTIVES To develop the best strategy for the financial sustainability of the cabin program,
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