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Finding True North A focus on stewardship, sustainability guides Delaware North Companies Parks & Resorts. Wednesday, February 03, 2010 Beth Kormanik

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Considering that Delaware North Companies Parks & Resorts includes properties in Yosemite, Yellowstone and the Grand Canyon -- not to mention the famed Plaza in New York City -- the firm's business strategy starts to become clear.
 
Location, location, location.
 
Several executives at the company confirmed that strategy, and discussed what they call its "stewardship" of properties during a conference call with the media Tuesday. They also discussed restoring one of Delaware North's newest acquisitions, the historic Queen Mary, and its commitment to sustainable building practices and purchasing.
 
"The concept of providing stewardship in hospitality in special places is the credo that guides our strategic decisions," said Kevin Kelly, president, Delaware North Companies Parks & Resorts. "We aren't looking to be a cookie-cutter lodging company."
 
The privately held Delaware North has annual revenue of $2.2 billion, with a mix of hotels, gaming destinations and sports venues. It launched its lodging business in 1992 after winning the contract to manage the lodging and visitors services in Yosemite National Park, and now manages 4,000 guestrooms worldwide.

"The economy has left many lodging companies reeling from depressed business and leisure travel," Kelly said. "Delaware North has not only weathered the storm, it's safe to say we are doing better than most, including much larger and senior competitors."
 
Jan Freitag, VP global development, Smith Travel Research, said that last year U.S. occupancy declined 8.7 percent from 2008, while RevPAR dropped 17 percent.
 
"Life is tough if you are a hotel operator," he said. "In general, the hotel industry has experienced unprecedented decreases in room demand. We had this perfect storm of an increase in number of rooms available while at the same time demand slipped away."
 
The good news, Freitag said, is that, with little financing available, few new hotels are coming into the market. He predicted zero change in occupancy rates this year -- in the mid 50s – but added that rates will continue to drop about 3.2 percent. The market should finally turn around in 2011, he said.
 
"The news is getting less bad," he said. "It's still not great, but at least we've left the worst behind us."
 
The story looked different at Delaware North, Kelly said. RevPAR was flat over 2008-2009, as opposed to the fall seen nationwide, and its occupancy dropped only 1 percent. Its ADR actually increased 3 percent, from $158 to $163.
 
How did it outperform the market? Kelly cited three reasons: the unique locations of the properties, focusing on areas that most closely touch customers, and carefully targeting acquisitions to its portfolio. A boost in national park visitation -- while other tourist attractions saw declines -- also helped the company. Kelly said Yosemite National Park received 3.9 million visitors in 2009, the highest there since 1996. Yellowstone also saw a record 3 million visitors, a 7.5 percent increase over 2008.
 
"Delaware North has a portfolio of the kinds of places that people will pay more to see," Kelly said. "The last few years have shown us, even if money is tight because of gas prices and unemployment is at a historic high and air travel is challenged, Delaware North can weather those storms because they are, in a word, special."
 
Freitag agreed with that assessment.
 
"It's absolutely noteworthy you are able to hold your rate and hold your RevPAR in this unprecedented environment, Freitag said. "You're not as reliant on group business, which in this environment is absolutely a positive. You have unique, freestanding properties that just cannot be replicated."
 
One of the company's strategies is to focus on environmental sustainability. Its GreenPath program, which began with its contract in Yosemite, is now in place at all of its parks and resorts. The program includes using local suppliers, limiting packaging, using recyclable packing materials and finding suppliers who share the company's commitment to the environment. Kelly also noted that all food outlets are now following the sustainable seafood guidelines from the Monterey Bay Aquarium.
 
Purchasing with environmental sustainability in mind has become easier over time, Kelly said.
 
"When we initiated GreenPath in 1999, back in those days it had additional costs," Kelly said. "Today that differential is not as big as it used to be. It's still marginally more expensive to do the right thing, but it's part of our cost structure we have built in."
 
Green also is important during the construction phases. The company strives for LEED certification from the U.S. Green Building Council on its buildings, and all of the company's project managers are LEED certified.
 
One of Delaware North's latest projects is the renovation of the Queen Mary. Delaware North was selected to manage the historic ship in September 2009. It draws more than 1.3 million annual visitors to its 314 overnight guest rooms, several restaurants, conference and catering space, and museum.
 
The renovations will include updating the primary restaurant, Sir Winston's, as well as the meeting spaces and promenade deck. General Manager Uwe Roggenthien said the wedding chapel also will get a makeover, and there are plans to give other restaurants new concepts.
 
Deb Collins, Delaware North vice president of sales and marketing, said the company would be mining its 1.6 million-name guest database to "introduce a whole new clientele to the Queen Mary."
 
"The recent renovations that have been taking place on the ship have sparked new life in the sales force and to those clients who have either not been introduced to the product before or who have been disillusioned by a product that wasn't quite matching current standards," she said. "We're turning that around quite quickly, and our leisure guests are responding."
 
With that project well under way, Delaware North is ready to move on to new ones.  As other companies retreat from ownership, Kelly said Delaware North will focus on acquisition this year.
 
"We are finding there are lenders out there to align with our growth strategy," Kelly said. "Equity may be sitting on the sidelines, but they're looking for a place to put their money."