We manage many different types of recreation properties under many different arrangements with government bodies. However, the most common arrangement is for Recreation Resource Management to operate a revenue-producing property under a type of concession agreement or commercial lease.
In these contracts, Recreation Resource Management is responsible for all aspects of managing the property, generally putting in place on site employees and managers. RRM performs maintenance and cleaning work for the property, and is responsible for most normal operating expenses, from insurance to marketing to utilities to regular maintenance. In return, RRM collects all revenues from the property, paying the government an agreed-upon percentage of the revenues as a fee. Typically, these contracts will specify the scope and quality standards of the work to be performed, the operating hours and days, the maximum fee rates, and, of course, the agreed-upon revenue share to government.
This type of contract structure has a number of advantages over typical flat fee or cost plus outsourcing contracts:
- Government expenses are capped – since there are none!
- The private operator, such as RRM, can work to improve both expense levels and revenue generation at the property.
- Our incentives are well-aligned with the agency’s — to make money, we have to keep the public satisfied so they will come back in the future.
- The contracts are not subject to year-to-year appropriations processes. No money to pay facility expenses or the private contractor has to be budgeted each year
The concession arrangement, however, is not always the most appropriate. For example
- Some parks, such as most city parks, simply cannot realistically charge a user fee. In this case, contracts tend to take the form of fixed cost or time and material contracts for park operations services
- As states close parks, they are increasingly turning to non-profits to take over parks. We are working on several different approaches to bringing our expertise and experience to these non-profits
Frequently Asked Questions:
- How does private park management work?
- Does the private company take ownership of the park?
- How does the private company get paid?
- How does this help keep parks open?
- Won’t private companies just let the facility run down to make more profit?
- Won’t private companies just build a McDonald’s in front of Old Faithful?
- Will private companies jack up the entrance fees?
- Won’t private companies just claim all the good parks and leave the money losers with the government?