The Business of Parks

1
The Business of Parks
2
Quick Review.

• What is the first step we consider when designing
  a trail?
• When we are inventorying an area to put in a
  trail, what are some of the factors we consider?
• What are two examples of direct mgt techniques,
  and two examples of indirect mgt techniques
  commonly used in trail management?

3
Objectives of Todays Lecture

• Outline the economic value of parks
• Discuss, in broad terms, the importance of
  effective and efficient financial management.
• Discuss the role of user fees, in particular the
  pros and cons associated with user fees and the
  different options for collecting user fees.
• Outline the main factors that should be
  considered in pricing strategies.
• Discuss other potential revenue sources

4
Readings

• Buckley, R. 2003. Pay to play in parks an
  Australian perspective on visitor fees in public
  protected areas. J. Sustainable Tourism.
  11(3)56-74.
• Putney A. 2003. Perspectives on the value of
  parks in Harmon, D. and Putney A. 2003. The Full
  Value of Parks from economics to the intangible.
  Rowman and Littlefield. P3-12.
• Note you were given this handout in week 2 in
  relation to assignment 1a.

5
Further References

• Bone, P. 1996. Identifying visitor perceptions
  of an acceptable park entrance fee. Australian
  Leisure 25 28.
• Bryson, N. S. and Kaczmarek, C. E. 2000. CRADAs
  the National Parks capitalize on their genetic
  resources. Environmental Quality Management.
  Winter Issue 93 99.
• Burde, J. 1999. Wilderness management some
  lessons from afar. Legacy 6 -9.
• Coffey, B. 2001. National Park Management and
  the Commercialisation of Nature The Victorian
  Experience. Australian Journal of Environmental
  Management. Vol 8 70 78.
• Crompton, J. L. 1997. Partnering with business
  whats in it for them? Journal of Park and
  Recreation Administration. 15(4) 38 60
• Harris, C. and Driver, B. 1987. User fees. I.
  Pros and Cons. J. Forestry. May 25 -29.
• McCarville, R. 1992. Successful pricing. Parks
  and Recreation. P. 36 -40
• Lowry, W. 1995. Nature under seige. State
  Government News. January. 8 11.
• More, T. A. 1999. A functionalist approach to
  user fees. Journal of Leisure Research.
  31(3)227-244
• More, T. and Stevens, M. 2000. Do user fees
  exclude low income people from resource-based
  recreation? Journal of Leisure Research. 32(3)
  341-357.
• Reiger, G. 1998. User fees Curse or Cure?
  American Forests. 94(26) 76-78.
• Schroeder, H. and Louviere, J. 1999. Stated
  choice models for predicting the impact of user
  fees at public recreation sites. Journal of
  Leisure Research. 31(3) 300-324.
• US National Park Service Fee Demonstration
  Project http//www.nps.gov/dena/home/visitorinfo/
  programs/userfee.html
• Winter, P and Palucki, L. J. 1999. Anticipated
  responses to a fee program the key is trust.
  Journal of Leisure Research. 31(3) 207-226.

6
Doing More with Less
How can we protect natural resources, provide
quality visitor service, and improve regional
economies with less staff and less budget?
7
The Solution??

• Understanding and communicating the value of the
  product
• Efficiency
• Effectiveness
• Innovation
• Public support
• Government support
• Corporate Support

8
The Value of a Park

• More than Tourism!!!
• Greatest value is non-use value (bequest values,
  option values, existence values)
• People receive a variety of benefits as a result
  of park experiences and these benefits have
  flow-on off-site benefits
• Parks tend to attract new residents and
  businesses and the economic activity they
  stimulate.

9
Why is revenue generation important if parks have
so much value????

• The public versus merit good argument

10
Todays million-dollar question

• How do we foster a culture that appreciates the
  need for appropriate financing and create systems
  that are effective, efficient, accountable and
  innovative??

11
The Budget Problem

• Not enough government appropriation to manage
  parks in an optimal manner
• Increased costs (eg. Salaries, maintenance,
  insurance, security), increased amount of
  property to manage, increased visitation not
  matched by increased operational budget
• Not perceived as essential service (eg.
  Hospitals, education).

12
The Dilemma

• Common option is user fees.
• All park services in Australia levy some type of
  user fee
• Are user fees the thin edge of the corporate
  wedge?

13
Types of fees and charges

• Entrance fee
• User fee
• Rental fees
• Licences
• Approx 100 for NBT licence and 50 per vehicle
  for more than 3 vehicles
• Permits
• Wildlife permits (e.g. keeping and trading native
  fauna), kangaroo seal tag fee
• Lease and Concessions
• Flat fee plus percentage of annual turnover (e.g.
  3 -5).

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Fees and Charges

• Common Objectives
• raise revenue
• ration use
• protect private sector

15
Fees and Charges

• Advantages
• control access
• control number of users
• equity
• visitor appreciation

• Disadvantages
• loss of appropriated funds
• loss of liability immunity
• double taxation
• poor public relations
• merit good

16
Issues in Charging Fees

• How much to charge?
• Who should pay?
• Is it fair?
• Should we use discriminatory pricing?
• Where should fee revenue go?
• Should dispersed users pay?
• Should eco-tourism operators pay?

17
Fees and Charges - Requirements

• Administrative practicality
• Financial practicality
• Properly timed
• Public awareness
• Consistency
• Enforcement

18
Collecting Fees

• Manual Methods
• fee collection booth
• roving patrol
• self payment
• reservation systems
• campground hosts
• other volunteers

• Mechanical Methods
• automatic gates
• parking meter

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Methods of Payment

• Cash
• Credit/EFTPOS
• Coupons / Annual passes

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How much to charge?

• Willingness-to-pay
• Hypothetical bias
• Level of service provided
• CPI adjustment since last fee increase
• Comparison with other facilities inter and
  intrastate.
• Cost recovery
• Quality of experience
• Increase or improvement in facilities since last
  fee increase
• Consideration of different users
• Marketing is important!!

21
Pricing Principles

• Participants seek fairness in pricing
• Price is considered most appropriate for
  activities that benefit only the participant
• Use other providers prices as a guide when
  developing new price levels
• Plan price increases carefully.
• Make consumers aware of the cost of providing
  services.

Ref McCarville/Dec 92/PR
22
Pricing Principles

• 2. Consumers Seek Value
• Focus on the benefits they will enjoy
• Use titles for programs and activities that focus
  on the benefits of participation
• Make the customer aware of how they benefit from
  paying a fee
• Compare new programs to will established and
  valued alternatives
• Promote the quality of your product and staff
• Stress convenience value
• Offer liberal refund policies.

Ref McCarville/Dec 92/PR
23
Pricing Principles

• Consumers Seek Choices
• Provide price alternatives
• eg. annual pass, season pass, concession rate
• Higher rates during peak season
• Less services, cheaper (eg. tent site vs powered
  site)

Ref McCarville/Dec 92/PR
24
Examples of User fees in Australia

• Choice vs Consistency
• The Importance of marketing
• Local vs non-locals
• South Australia (2008 prices)
• Varies, confusing most around 7.50 per
  vehicle, 3 motorbike, 4.50 adult, 3.50 child)
• South Australia (2005 prices)
• Varies from 5 - 18 per vehicle. Most 6.50
• Variety of annual passes (has been reduced from 8
  5 in the last year)
• Multi Park Pass 63 per vehicle (excludes Desert
  Parks and KI)
• Holiday Pass 28 per vehicle 2 months (excludes
  Desert Parks and KI)
• Desert Pass 90 per vehicle only desert parks
• Single Park Pass 42 per vehicle one park only,
  excludes Desert Parks and KI
• Kangaroo Island Pass 42 for Flinders Chase per
  person, not vehicle Family Pass 110 South
  Coast Ticket (Seal Bay tour and Kelly Hill Cave
  tour) 72 for family 27 per adult.

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Price Comparisons

• Tasmania (2008 prices)
• Daily pass 22 per vehicle for all parks or 11
  per person
• Allows max of 8 people per vehicle
• cf 2003 price 10 per vehicle).
• Holiday pass 56 per vehicle or 28 per person
  (8weeks)
• (cf 2003 price 33 for 3 months)
• Annual pass
• New 90 per vehicle (72 concession)
• Renewal 66 per vehicle (53 concession) 30 per
  person
• (cf 2003 price 46 per vehicle)
• One park annual pass
• New 46 per vehicle (37 concession) Renewal 33
  (26 concession)
• 2 year pass 115 per vehicle (95 concession)

• Western Australia (2008 prices)
• 10 per day pass
• Holiday pass (4 weeks) 34
• Max 1 vehicle, 8 people
• Annual pass 75
• Local parks 20
• Gold Star 100 (includes all park and magazine
  subscription

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What Affects Our Willingness to Pay????
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Will They Pay??

• YES!!!!
• Case Study Milford Trail (New Zealand)
• 53km (4 days / 3 nights)
• 2008 track fees
• Peak 120 adults, 60 youth
• Off-peak 30 adults, 15 youth
• Hut pass 90 adults, 45 youth
• Compare 2003 Prices
• 40 independent trampers 40 guided trampers
• Independent hikers 153.70 (adult) 74.20
  (child) mandatory fees for bus access to and
  from access point.
• Guided trampers 850 (adult) 350 child

28
Will They Pay??

• Overland Trail (Cradle Mt Lake St. Clair NP)
• 2009 park fee 160 per adult. 128 for children
  over 5 (fee only applies in summer)
• Compare 2008 just park entry fee Compare 2005
  100/ adult (2003 prices 10/adult 5/child
  25/family)
• Commercial Operator in 2009 - 1899 per person

29
Will They Pay??

• Port Arthur (2008 prices)
• Bronze Pass 28 adult (23 conc, 14 child, 62
  family 2 6 kids
• Entry and harbour cruise
• Silver Pass 66 adult (61 conc, 48 child)
• Entry, Isle of Dead or Point Puer tour, audio
  tour, lunch)
• Gold Pass (98 adult, 93 cons, 76 child)
• Entry, Isle of Dead tour, Point Puer tour, audio
  tour, lunch, morning and afternoon tea

30
Wilsons Promontory Cabins (1 week, twin share)
1137.50 (2009/2010) Camping (campground, per
night, 1 -3 people, 1 vehicle) 23 (peak)
18.50 (off-peal) Outstation (per night)
4.90 Wilderness Retreat 250 per night
31
Does it discriminate?

• Probably!!
• More and Stevens (2000) showed 25 of low income
  respondents indicated they had reduced the number
  of visits they took to a park, or gone somewhere
  else since the introduction of fees.
• It is important to have a mechanism in place to
  reduce this problem.

32
Other options for financing parks

• Concession contracts
• Ear-Marked funds, Donations, Bequests
• Cooperative Associations, Friends groups, Not-for
  Profits (NGOs).
• Excise Taxes
• Levies
• Bearer Bonds
• Privatisation

33
Other sources of financial support

• Grants
• Eg. ARC Linkage Grants, various government and
  private sources.
• Sponsorships
• Eg. Clipsal Cockatoo Rescue on Eyre Peninsula,
  Glossy Black Cockatoo recovery project.
• Partnerships
• Eg. Dept. of Corrections (Mobile work-camps), NRM
  Boards

34
Other sources of financial support

• Volunteers
• Friends Groups, Campground Hosts, Cooperative
  Associations
• Fundraising events Walk for Wildlife

35
Foundations

• Eg. Nature Foundation SA Inc
• Fundraising Campaigns
• Greencard
• Bushbank
• Revolving fund ie. Buy, protect, on-sell.
• Good business awards
• Research Grants
• Postgraduate Scholarships
• Community Education

36
Ways to Save Money

• Outsourcing
• Decreasing Services
• Decreasing Staff
• Divesting Parks
• Etcetera.

37
Outsourcing

• Contracting out is a management tool that shifts
  the performance of functions previously performed
  by public employees to the private sector.
• It is done for a variety of reasons including
• Insufficient funding of park organisations
• Perception that government is less efficient than
  private sector
• Park staff may not be the best qualified to
  perform certain tasks, and the performance of
  some tasks, decreases attention provided to
  important NRM responsibilities.
• Government should support private enterprise