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Wednesday, 13 August 2014 14:47

A concessionaire’s conundrum: Pisgah Inn owner hoping NPS contract renewal yields 10 more years of local ownership

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coverBy mid-August, there’s already a chill in the air outside Pisgah Inn. Employees and experienced guests walk around in pants and long sleeves, while visitors who didn’t realize August could be this cool sport shorts and tank tops. At 5,000 feet, the panoramic view stays year-round, but autumn comes early. 

“This time of year, it’s full every night,” said the inn’s owner/operator Bruce O’Connell. 

People looking to get away from the heat of summer or see the splendor of fall on the Blue Ridge Parkway book their rooms months ahead of time, eager to take advantage of the myriad hiking trails that split off from the 7-acre campus or just absorb the view from the rocking chairs that sit on each room’s porch, facing the sea of blue ridges. There’s a restaurant with heavily windowed walls and a store selling a variety of local crafts as well. Funnel Top, Black Mountain and Looking Glass Rock are all visible from the south-facing panorama. 

“How could you ask for a better place to work?” said Fran Sherlin, retail manager for the inn’s gift shop. She’s worked at the inn for 28 years, drawn to stay by “the spirit of the place, really,” along with the local crafters she gets to work with and the guests who she sees year after year. She’s planning to stay until she retires. 

“We have people come that had their honeymoon here 20 years ago, some 30 years ago,” Sherlin said. 

Or even 45 years. That’s when Jessie and Marlin Brown of North Augusta, S.C., first came to Pisgah Inn as honeymooners, and they’ve been returning ever since. 

“We feel very comfortable here,” Jessie said. 

But O’Connell isn’t so sure that visitors like the Browns will experience that same brand of comfort 10 years from now. He’s waiting anxiously to hear back on a decision that will determine whether he keeps on with business as usual or starts packing up beds and tables. 

The inn has been part of O’Connell’s life since 1978, when he bought into the business with his parents Phyllis and Tom. His dad passed away in 1985, but his 90-year-old mother still lives in Waynesville, still takes an interest in the hotel. She and her son are now 100 percent owners of the business. For seven months a year, O’Connell, 59, works at the inn while making his home in Candler — during the off-season, he’s a scuba instructor in Mexico. 

“It’s fun,” he said. “I’m lucky.”

 

The way of the dinosaurs?

It’s not financial hardship or waning interest that would cause O’Connell to walk away from Mount Pisgah. He’s good to go for another 10 years, but ownership of the Pisgah Inn isn’t quite as straightforward as for your typical hotel. The Inn sits just off mile 408.6 of the Blue Ridge Parkway, National Park Service property. O’Connell operates as a concessionaire of the Park Service, a complicated designation that means the Park Service gets a cut of his profits, a say in his rates and infrastructure improvements — and the opportunity to periodically cast its net for a better operator. 

It’s this last part of the arrangement that has O’Connell worried. 

“The trend throughout the National Park Service has been and is for the small independent operators like me to go the way of the dinosaurs and all these types of concessions to be run by larger corporations,” he said. 

The O’Connell family won contract renewal in 1984, back when the contracts worked on a 20-year cycle, and then a 10-year contract in 2004. At the end of this year, that term is up. 

O’Connell isn’t feeling that secure about the next 10 years. He looks at examples like Cades Cove Campground Store and Riding Stables, whose contract renewal recently went to a large company called Ortega National Parks. The concession is currently operated by a Maryville, Tennessee-based company. The owner did not return calls requesting comment.

Further north on the Parkway, Peaks of Otter Lodge went in 2013 to Delaware North, a giant hospitality company that manages properties spanning the globe. The local company that managed the lodge for decades had opted not to rebid. 

“They are right up the road from me,” O’Connell said of Delaware North. “They just took that one over and I feel like they’re eyeballing me. And that’s only one of the larger operators that are eyeballing me.”

There’s no proof of that. The bid process is a closed one — even though bid submissions for the Pisgah Inn closed last week, the Park Service can’t reveal who the contenders are — and both Delaware North and Xanterra Parks and Resorts, another large company that manages concessions in a variety of national parks including Zion and Yellowstone, declined to comment on whether they had submitted one. Ortega did not return a call requesting comment. 

And Laura Nelson, concessions management specialist for the Blue Ridge Parkway, doesn’t agree with O’Connell’s assessment that larger companies are increasingly gobbling up the little guys. She hasn’t noticed such a trend  in her 11 years in concessions management. 

“Personally, no, I have not,” she said. “Now, it is a complex process, and I think what may be happening is we’re actually getting more bidders, whereas before if you had a concession contract you would probably automatically keep it.”

Today, the Park Service might get five to seven bids for any given contract, Nelson said, while 10 years ago that wasn’t really the case. Often, it’s the bigger companies that are making the bids, because operating a hotel requires some substantial up-front cash. 

“I am not an expert on all concessions and all parks, but I have worked in five parks and I don’t think I have generally seen that,” she said of O’Connell’s theory. “It seems like the big contracts that require a lot of initial investments go to big companies that can afford to put that money up front.”

 

A complicated process

O’Connell feels otherwise, though, to the point that he paid a consultant a sum he’ll only describe as “big bucks” to write his proposal for him. That’s not something he’s done before. 

“The last couple times I did it myself,” O’Connell said. “I sat down, wrote it, went to Kinkos, printed it out.”

This time, though, it was different. Things have gotten a lot more complicated, and the questions the Park Service asks in the prospectus — a document akin to an application —  require a good deal of specialized knowledge. 

For instance, the one for the Pisgah Inn asks for specific actions the company will take to reduce its impact on wildlife and vegetation and for a plan to reduce greenhouse gas emissions and energy consumption from vehicles, heating and air conditioning units and appliances. Answering those questions adequately requires a good bit of knowledge beyond the sphere of hotel operation. The big companies have those specialists on staff, or at least on retainer. 

By the time it’s all said and done, O’Connell said, you’re looking at a phone book’s worth of pages, and if you miss one question, forget one signature, the whole application gets tossed out. Big companies like Delaware North have staffers who specialize in that kind of thing, write those sorts of documents for a living. O’Connell does not. 

“There’s so much out there that I don’t have knowledge about that I would not be able to provide the same level of proposals that a professional would,” O’Connell said. 

Unlike a county’s bid for, say, a company to grade a construction site, Park Service concessions contracts aren’t awarded based on which proposal would be best for the government’s financial bottom line. Concessionaires do pay a franchise fee — a cut of gross receipts that can range from one-half to 10 percent — and they do pay a maintenance fee, but proposals are graded on a whole host of criteria. 

“We’re not looking for the person to pay us the most for the contact,” Nelson said. “We’re actually looking for the entity that has the most experience and the plans that line up with what we’re looking for.”

All the proposals for a particular contract go to the Park Service’s regional office in Atlanta to be scored by a group of people vetted as having no personal connection to the bidders or the park. 

The panel doesn’t give the current operator any preference points for being there already. Each bidder is graded based on experience, but experience operating a similar enterprise a thousand miles away wouldn’t score much differently than decades spent managing the very concession up for bid. 

“There’s no formal preference, but you are rated on your experience,” Nelson said. “If you have experience operating this property or a similar property, you would get credit for your experience just like any job you were interviewing for.”

 

Consulting on commitments 

So, it was important that O’Connell make his bid as attractive to the Park Service as possible. Throughout the proposal writing process, O’Connell’s consultant would come to him with questions, asking what changes he would be willing to make to craft a more competitive bid. 

“He asked me questions,” O’Connell said. “He said, ‘Bruce, would you commit to eliminate every glass bottle at Pisgah Inn?’” 

Then, O’Connell would look into the feasibility. He contacted his wine supplier to find out if the wines he purchases come in boxes rather than bottles, looked at how much it would cost to sell soda from a fountain machine rather than in bottled form. Then, O’Connell would go to his accountant to run the numbers, figure out if the business could shoulder the burden of paying for those changes in the timeframe laid out in the proposal. O’Connell had to show that it could. 

“I have to prove to the government I’m not just babbling at the mouth,” O’Connell said. “I have to prove there’s enough revenue coming in to live up to all the commitments I’m making.”

O’Connell’s proposal contains 297 such commitments, from switching to LED lighting to using all biodegradable cups. He knows that keeping those promises isn’t going to make him a rich man. But he hopes that by making them, he’ll get to keep the inn for 10 more years. All he wants is to break even.

“I, Bruce, have everything in the world that I need or want right now. I don’t want another house, don’t want another car. I don’t want another vacation,” he said. “I don’t have to make a big profit anymore because I don’t want anything else. I just want to make sure my key people can have 10 years of job security and make good money.”

 

Like family

His key people hope so, too. For many of them, the inn is like a second home. For some, it’s the only place they’ve ever worked. Ian Drobka, the 36-year-old food and beverage manager, started working at Pisgah Inn years ago as a teenage dishwasher for the restaurant. The inn’s biggest source of visitors, it can attract up to 1,200 people per day in peak season. Drobka’s worked his way through the ranks into a year-round job at what he considers one of the most beautiful places on the planet. 

“Bruce and Phyllis are great people to work for,” Drobka said. “They’re like family. The mountains around here are some of my favorite places on earth.”

Hotel staff are all sitting tight to see what the future holds, but they’re hoping it holds more of the same. 

“We’re all crossing our fingers,” said Doug Baird, a three-year employee who works in the restaurant.

So are Dee and Tom Clere, a married couple from the Raleigh area who have been coming annually for the past five years. 

“It’s nice and relaxing. It’s relatively inexpensive because you get a complimentary breakfast and usually that’s enough to last till an early dinner. There’s a lot of hiking trails, and we enjoy that,” Dee said. “It’s just a good place and it’s so blessedly cool.”

Asked her thoughts on the contract renewal, Dee was quick to say she’s rooting for O’Connell. 

“You get chains in and everything is so plastic,” she said. “It’s the same whether you’re in Raleigh or Richmond. I like the local differences.” 

Loading up the car for a photography outing to Looking Glass Rock, the Browns expressed a similar opinion. They said they’d probably still come stay if the ownership changed, but they’d just like things to remain the same — local. 

“I don’t like a big chain coming in,” Marlin said. “I prefer it to be held more or less locally. Let them stay in Aspen and Colorado.”

“You learn so much more with the local people,” his wife agreed. “They’re all very appreciative of this area.”

 

The waiting game

The Browns had heard about the contract renewal over breakfast, when another media outlet came to cover the issue. It wasn’t the first time they’d been to Pisgah Inn in the midst of heavy press attention; the couple was staying at the inn last October during the government shutdown. The shutdown closed all national parks, including concession operations like the inn. O’Connell, whose business is busiest during the October leaf season, closed for the first six days of the 16-day shutdown. After his legal team got involved, he was allowed to reopen. 

“They closed it down the day we left,” Marlin said. 

Now that his contract is up, O’Connell’s left hoping that last fall’s act of defiance won’t affect the decision this year. His employees echoed each other’s hopes that the contract award will be based purely on the merits of the applicants, not on politics, while O’Connell himself says he believes the government will keep that factor out of the decision. 

“I’ve had a 40-year relationship with the Park Service, and I do believe that they have enough wisdom and experience that the panel that will be reviewing all the proposals for this place — I have to believe they’re going to make the best decision,” O’Connell said. 

“From the Park Service point of view,” Nelson said, “We are looking for the best operator who can serve our visitors.”

The panel will make its decision within the next few weeks, but before anybody — even O’Connell — hears the results, the paperwork will go up to Washington, D.C., for review. It will probably be pretty close to the end of O’Connell’s current contract, Dec. 31, before the results go public. 

If he gets the bid, he’ll be good to go for another 10 years. If not, he’ll have to head out, though not quite empty-handed. O’Connell owns all the personal property — beds, vehicles, kitchen equipment — inside the inn, and the new manager would be obligated to pay him some value based on the millions of dollars O’Connell has sunk into improving the property, improvements that include a recent $2.5 million renovation of one of the hotel buildings. 

For now, though, the hustle is over. There’s nothing to do but leap into the bustle of the coming leaf season and wait on the word. 

“Right now,” O’Connell said, “We’re on the wait and see mode.”

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