Concession Guidelines 2012

i

University of Waterloo, 2012

Guidelines for the Planning and Management of

Concessions, Leases, Licenses, and Permits in Parks and

Protected Areas

Paul F.J. Eagles and Maria K. Legault

Guidelines for Concessions, Leases, Licenses, and Permits

ii

Guidelines

for the

Planning and Management of

Concessions, Leases, Licenses, and Permits in

Parks and Protected Areas

University of Waterloo

Waterloo, Ontario Canada

2012


iii

The Authors

Paul F. J. Eagles is a Professor in the Department of

Recreation and Leisure Studies at the University of

Waterloo in Canada.

Maria Legault (B.E.S.) is currently a Graduate

Student in the Tourism Policy and Planning

Program at the University of Waterloo in Canada.


iv

Acknowledgements

An earlier version of this document was prepared by graduate students from the

Tourism Policy and Planning Masters Program, University of Waterloo. These include;

Cynthia M. Baycetich, Xiaoye Chen, Lina Dong, Elizabeth Halpenny, Pia B. Kwan,

Jasminka J. Lenuzzi, Xiye Wang, Honggen Xiao, and Yubing Zhang.

Jonathan Putnam and Steven Morris of the International Office of the National Park

Service of the USA organized workshops in 2008 and 2011 on visitor management in

World Heritage Sites. The attendees at those workshops contributed, through their

comments, important components of this document. Jock Whitworth, the

Superintendent of Zion National Park, provided information on the operation of the

shuttle service in that park. Sixto Narango and Danny Rueda of Galapagos National

Park provided information on tourism management. John Lohuis, lecturer at the

University of Waterloo, provided information on concession income. Guy Castley, of

Griffith University, provided information on South Africa national parks. Jim

Luscutoff, Division Chief of Concessions, Reservations and Fees, of California State

Parks provided information on the contracting procedure in California. Aaron Roth,

the Deputy Superintendent of Golden Gate National Recreation Area, provided valuable

information. Julio Zoroski provided information on Brazilian national parks. Jo

Pendry, Concession Program Manager and Debra Hecox, Planning and Development

Chief for Commercial Services, both of the National Park Service of the USA, provided

background information. Rita Casimiro (Mozambique) provided information on

transparency. Scott Elliott communicated with student Patrick Flannery on the issue of

Friends Groups in Parks. Jim Barborak, Colorado State University was helpful in

many aspects of this project.

Title page images include an aboriginal artisan selling products in a cultural center

of Taroko National Park, Taiwan (top); the Hamilton's Store located in a historic building

in Yellowstone National Park, USA (middle); and service buildings for the Maligne Lake

boat tour in Jasper National Park, Canada (bottom). All the photos in this book were

taken by Paul Eagles.

The authors of the current report had difficulty in obtaining the contracts between

third parties and service providers. Most park agencies refused to provide copies of the

the contracts, or to provide details of their contents. This revealed a major problem

with transparency and accountability in many jurisdictions in this issue.


v

Abbreviations

Alaska Department of Fish and Game (ADFG)

Build-Operate-Transfer (BOT)

Commercial Business Unit (CBU)

Commercial Services Program (CSP)

Commercial Use Authorization (CUA)

Department of Conservation (DOC)

Environmental Management Program (EMP)

European Federation of Tourist Guide Associations (FEG)

Grand Canyon National Park Operating Plan (GCNPOP)

Great Barrier Reef Marine Park (GBRMP)

Hotel Catering and Institutional Management Association (HCIMA)

Ministry of Environment and Tourism (MET)

Modified Cost plus Incentive Fee Contract (CPIF)

National Park Service (NPS)

New South Wales Parks and Wildlife Service (NSW)

Niagara Parks Commission (NPC)

Organization for Economic Co-operation and Development (OECD)

Parks and Wildlife Service (PSW)

Portable Document Format (PDF)

Project for Public Spaces (PPS)

Protected Areas Conservation Fund (PACT)

Public-Private Partnership (PPP)

Rehabilitate-Operate-Transfer (ROT)

Request for Proposals (RFP)

Request for Qualifications (RFQ)

South African National Parks (SANParks)

States News Service (SNS)

United States Department of the Interior (USDI)

Yellowstone National Park (YNP)

Workplace Hazardous Materials Information System (WHMIS)


vi

Table of Contents

Prelude: Structure of this Guide ____________________________________________ 1

Chapter 1: Overview of Park Tourism Management _________________________ 3

1.0 Why outsource park operations? ______________________________________________________ 3

1.1 What are concession contracts, leases, licenses, and permits? __________________________ 9

1.2 What is the process for deciding upon a concession, lease, license, or permit? _________ 15

1.3 What is the process for selecting an external provider? ________________________________ 16

1.4 How should concessions be regulated? ______________________________________________ 20

1.5 How can concessionaires be monitored? _____________________________________________ 30

1.6 Can Friends Groups provide park services? __________________________________________ 31

1.7 Why might the park agency operate as a parastatal? _________________________________ 32

1.8 What conflicts might arise amongst service providers? ________________________________ 33

1.9 What happens if a contractor goes bankrupt? ________________________________________ 34

1.10 Summary: What are the pros and cons of using a concessionaire? ____________________ 34

Chapter 2: Two Perspectives of Concessionaire Expertise __________________ 37

2.0 What are the required qualifications from the park agencys perspective? ______________ 37

2.1 What are the required qualifications from the concessionaires perspective? ___________ 39

Chapter 3: The Retail Sector in Protected Areas ____________________________ 43

3.0 What are the benefits of selling retail items in protected areas? ________________________ 44

3.1 How can park managers monitor local retail concessions? ____________________________ 48

Chapter 4: The Accommodation Sector in Protected Areas ________________ 48

4.0 What are the different types of accommodations available in protected areas? ________ 50


vii

4.1 How can accommodations be managed by the park agency? ________________________ 52

4.2 How can accommodations be monitored by the park agency? _______________________ 56

Chapter 5: Transportation in Protected Areas ______________________________ 59

5.0 What goals should park managers set for a transportation concession? ________________ 60

5.1 What challenges surround transportation concessions in protected areas? _____________ 62

Chapter 6: Food Sales and Restaurants in Protected Areas _________________ 66

6.0 What types of food operations occur in protected areas? ______________________________ 67

6.1 How can food facilities be managed by the park agency? ____________________________ 68

6.2 How can park managers monitor food concessions impacts on human health? ________ 70

6.3 Summary: What is involved in private food provision in parks? _________________________ 71

Chapter 7: Tourism Guiding Permits in Protected Areas _____________________ 72

7.0 What are the different types of guides in protected areas? _____________________________ 73

7.1 How can park managers identify the need for a guide? _______________________________ 75

7.2 How can park managers select and manage applicants? _____________________________ 76

7.3 How can park managers monitor the activities of guides? _____________________________ 80

7.4 Summary: What are the benefits of interpretive services? ______________________________ 81

Chapter 8: Recommendations for Park Managers _________________________ 83

References ______________________________________________________________ 88

Glossary ________________________________________________________________ 94


viii

List of Figures

Figure 1. California State Parks contract Aramark Parks and Destinations to operate the

Asilomar Conference Center. .............................................................................................................. 5

Figure 2 . Bidding and selection procedure, Lin (2000, pp. 27). ............................................... 19

Figure 3. In Point Pelee National Park the transit is operated by the Friends of Point Pelee.

.................................................................................................................................................................... 32

Figure 4. Reception Center at Skukuza in Kruger National Park. SANParks functions as a

parastatal. ............................................................................................................................................... 33

Figure 5. Niagara Falls experience. The Niagara Parks Commission (Ontario, Canada)

provides many recreation programs and facilities with its own staff, without the use of

concessionaires or contractors. ................................................................................................... 36

Figure 6. Yurt in Algonquin Provincial Park (Canada) offers semi-permanent tents for a

four-season camping experience. Ontario Parks operates these directly, without the use

of a contractor. ...................................................................................................................................... 42

Figure 7. Concessionaire store in Mopane Camp in Kruger National Park (South Africa).

.................................................................................................................................................................... 43

Figure 8. Retail store operated by the Niagara Parks Commission (Canada). ................... 44

Figure 9. The Niagara Parks Commission informs the park visitor that retail sales benefit

the park. ................................................................................................................................................... 45

Figure 10. Ontario Parks is increasingly moving from concessionaire operation of retail to

park operations. ..................................................................................................................................... 47

Figure 11. Presquile Provincial Park (Ontario, Canada) encourages Friends Groups to

operate a gift shop within a park building. .................................................................................... 48

Figure 12. Campsites within campgrounds are a common accommodation facility in

many parks. ............................................................................................................................................. 49

Figure 13. Campsite suitable for recreation vehicles in Algonquin Provincial Park

(Canada) ................................................................................................................................................. 52

Figure 14. Killarney Lodge in Algonquin Provincial Park (Canada) operates on the basis of

a long-term lease. ................................................................................................................................. 53

Figure 15. Fort Baker, a former military installation, is within the Golden Gate National

Recreation Area (USA). It is now operated as a private resort named Cavallo Point

Lodge. ..................................................................................................................................................... 55

Figure 16. The Rondovel at the Skukuza Camp in Kruger National Park (South Africa) is

owned and operated by SANParks. SANParks also has concessionaires operating

accommodation units, while at least one is operated by a community group. ................ 56


ix

Figure 17. Boat transport for the eco-tourists who visit the Heron Island Resort in the Great

Barrier Reef Marine Park (Australia). ................................................................................................. 60

Figure 18. Highway 60 through Algonquin Provincial Park (Canada) provides valuable

access to the park for visitors. However, it is also heavily used for industrial and

commercial traffic. ................................................................................................................................ 63

Figure 19. Parks may provide specialized transport, such as this tramway to a mountain

top in Jasper National Park (Canada). ........................................................................................... 65

Figure 20. Sausage cooking at the Vaattunky Eco-Resort in the Arctic Hiking Area

(Finland). The preparation and eating of food is a part of the ritual of outdoor

recreation. ............................................................................................................................................... 66

Figure 21. Bush Brai at Mopani Camp in Kruger National Park (South Africa). Private

operators often provide distinctive dining opportunities. .......................................................... 70

Figure 22. Preparing and eating food is an important part of the ritual of park use. ........ 71

Figure 23. Parks often require licensing for commercial tour operators within a park. ...... 72

Figure 24. Park agencies often license private tour operators to ensure levels of

competency. .......................................................................................................................................... 74

Figure 25. Factors influencing a needs assessment. Source: USDA Forest Service,

Outfitting and Guide Administrative Guidebook, 2000. Available at:

www.Fs.fed.us/recreation/permits/outfitting/guide .................................................................... 75

Figure 26. Marine ecology guide at the Heron Island Resort in the Great Barrier Reef

Marine Park (Australia). ........................................................................................................................ 80

Figure 27. Many parks use their own staff to provide education and interpretive services,

as in Yellowstone National Park (USA). ............................................................................................ 82

Figure 28. Naturum, the visitor center in Fulufjallets National Park (Sweden) ....................... 83

Figure 29. Sabi Sabi Private Game Reserve is adjacent to Kruger National Park (South

Africa). Private ecolodges outside parks are providing competition to parks due to their

quality service and facility levels, typically much higher quality than that found in parks.

.................................................................................................................................................................... 85

Figure 30. Algonquin Provincial Park works with local municipalities to share the

contracting of the collection of garbage and recyclables from park campgrounds. .... 87


x

List of Tables

Table 1. Highlights of park agency websites and related link. ................................................................. 8

Table 2. Concession contract duration in various park agencies worldwide. .................................... 13

Table 3. Tasks and schedule in choosing a concession (Havitz, 1999). ................................................ 16

Table 4. Environmentally responsible practices in concession contracts (Wyman et al., 2011). .... 28

Table 5. Environmental best practices for accommodation (United Nations Environment

Programme-Industry and Environment [UNEP-IE] and International Hotel and Restaurant

Association [IHA], 1996). ................................................................................................................................ 57


1

Prelude: Structure of this Guide

The purpose of this guide is to train park staff in the management of concessions,

leases, licenses, and permits in a park tourism context. Virtually every park agency has

at least one external organization operating within park boundaries; however, there is a

paucity of inter-practitioner communication and scholarly research in this subject area.

This document is designed to help fill this gap in the literature. Strategies

recommended throughout the document are aimed at creating mutually-beneficial

exchanges between park managers and external providers. Although there have been

tensions between both groups in the past, the future holds a fair amount of promise.

Positive examples of park-provider interactions exist in the United States, New Zealand,

Australia, South Africa, and Canada. Lessons learned from these interactions will be

related back to the theoretical findings of researchers.

Chapter one provides a holistic overview of external providers in a park setting.

This chapter explains why non-park groups are allowed to operate in parks, how they

should be chosen and regulated, and what activities they should be expected to perform.

Chapter Two investigates the issue of qualifications in the provision of goods and

services from the perspectives of both the park agency and external providers. Chapter

Three details the benefits of allowing local community members to participate in market

opportunities within the park through the sale of gifts and handicrafts. In Chapter Four,

the different types of accommodation in the parks are presented, along with methods

park agencies can use to manage and monitor their activities. Chapter Five, Six, and

Seven cover food sales, transportation, and guide/outfitter management, respectively.

The guide covers large-scale concession contracts and leases as well as the shorter-term

management issues of licenses and permits.

This handbook should be treated as an outgrowth and extension of the IUCN

Guidelines on Sustainable Tourism, in which the concept of managing concessions and

contracts is introduced in Section 9.8 (Eagles, McCool & Haynes, 2002). The current

document goes into greater depth on the subject. Many parks have a complicated

mixture of different types of operators in parks. The park staff may operate the park

gate, maintenance, and enforcement activities. A non-profit friends group may assist

with the education programs. A profit-making company may operate the park store.

Meanwhile, a local municipality may operate some of the infrastructure maintenance.

This manual is designed to help decision-makers sort through this complexity in order to


2

to provide the best combination of financial efficiency, community consensus,

transparency, and accountability that is possible in a public organization.

A set of guidelines for the management and operation of concessionaires within

public parks has been requested by many groups over time. In 1963, the American

Institute of Park Executives, Inc., stated that the park and recreation executive has long

needed a tool to guide him [sic] in the preparation and execution of concession contracts

contracts (Memmel, 1963, pp. 3). Again in 1997, the North American members of the

World Commission on Protected Areas requested a set of provisional guidelines for

concessionaires. It is hoped that this guide will stimulate conversation amongst the

scholarly, private, and non-profit communities and generate an active response to the

concerns raised herein.


3

Chapter 1: Overview of Park Tourism Management

Visitor services are those facilities and services provided to park visitors to assist

their use and enjoyment of a park. These services often include: lodging,

campgrounds, food services, merchandising, tours, recreation activities and facilities,

guiding, interpretation, transportation, as well as equipment sales and rental. Park

managers must decide who will provide these services and what legal instrument to use

for any outsourcing endeavor. The service may be provided by park agency staff, a

profit-making company, a non-profit company, or a community group. The park

agency is typically governmental (i.e. public), while the latter three organizations

operate within the private sphere. Legal instruments for outsourcing include

concessions, leases, licenses, and permits. Some park agencies develop a commercial

services plan to harmonize the use of external services and related legal instruments.

Many park agencies have no overall plan for the provision of tourism services to the

public. Often historical precedent is used, without a full consideration of all the

options. It is hoped that this manual will aid policy makers and managers in these

decisions.

This chapter one will provide the reader with background on concession operations,

explaining why non-park groups are allowed to operate in park settings, how they

should be chosen and regulated, and what activities they should be expected to perform.

It is important to note that the legal situation surrounding concessions, leases, licenses,

and permits varies between countries. These guidelines are necessarily general in

nature and must be utilized only with the legal advice provided to the parks and park

agencies in each jurisdiction.

1.0 Why outsource park operations?

Two strategies that managers can use to provide visitor services within the park

include outsourcing and insourcing. Outsourcing brings private sector (i.e.

concessionaires) operators into the park, with the assumption that they will operate

efficiently as well as provide high-quality, responsive visitor services. All outsourcing

comes from policy goals. Park policy goals are set by governing legislation and policy

documents. These goals can include: financial gain for the agency, local community

empowerment, high service quality to the public, as well as adherence to park law,


4

goals, and plans. The goals must be clearly understood before deciding what

management model to use and how to use it.

Sheail (2010, p. 201), when describing the financial situation in the national parks of

the USA, stated that: Without congressional appropriation, the Park Service had no

alternative but to continue soliciting private capital for the purposes of feeding,

sheltering and transporting visitors. This is a common situation in many park agencies,

where government will not provide sufficient operating and capital monies to

effectively operate tourism in the parks. In many cases, government agencies are

unable to function like businesses, lacking the ability to retain income, set fees, and

retain income at the end of the fiscal year. In these situations they must seek the

support of external organizations.

When management responsibility is transferred from the park agency to an external

provider, a public-private partnership (PPP) is created (Ziegler, 2011). PPPs require

that park managers create a complete contractual agreement which states the role(s) of

the external organization and how concession revenue will be reinvested into the park.

For example, in California State Parks (see Figure 1) there are 190 concession contracts,

with 42 of these earning more than US$500,000. This provides over US$12,000,000 in

income to the park agency each year (Luscutoff, n.d.). Park agencies, however, may

prioritize obtaining funding for capital improvements and maintenance through the

concessionaire over their control of park services. This can result in long-term leases

which are challenging for park managers to monitor and control.

There are two options for outsourcing. One option is for the park agency to work

with a profit-making company, typically with specialized expertise. Another option is

to work with a non-profit company, typically with special interest in the park and its

resources. Some park systems have developed Friends Groups, which are in-park

non-government organizations, to provide specialized services, such as education and

interpretation. Other parks use community groups, such as the parks and recreation

department of the local municipality, to provide some services.


5

Figure 1. California State Parks contract Aramark Parks and Destinations to operate the Asilomar

Conference Center.

Insourcing requires that the park agency accept the responsibility and cost of

directly managing visitor and tourism services. This can entail higher levels of liability

risk for the park agency, greater strain on scarce personnel resources, and more

requirements for internal expertise. However, it can also provide more income for

park management activities when the park agency is structured appropriately (Moos,

2002). Lohuis (pers. comm.) maintains that the net income for many typical tourism

services in a park is around 30% above cost. If the park uses an outside contractor, the

park earns about 10% and the contractor about 20%. Therefore, if the park insources

the service delivery, it keeps the entire 30%.

Outsourcing and insourcing are not mutually exclusive; the park agency can work

with a non-profit or for-profit organization separately or in combination.

Relationships within these arrangements can vary based on land ownership and

sources of management money, including societal taxes, user fees, and donations.

China is experimenting with using of profit-making corporations in parks, but with the

park agency taking an equity position in the corporation (Su, Wall & Eagles, 2007).


6

Different combinations of public and/or private providers, land ownership and

funding source have resulted in the following forms of management (Eagles et al., 2002;

Eagles, 2008; Eagles, 2009):

Park agency;

Parastatal (i.e. a corporation owned or wholly controlled by the

government);

Non-profit;

Ecolodge;

Public and for-profit combination;

Public and non-profit combination;

Aboriginal and government;

Local community; and,

Traditional community (i.e. as an owner and management institution).

In determining the desired management combination for delivering park services,

the park agency should review its operations, with consideration for the following

issues. The capacity and legal powers of the protected area agency must be

determined. Current park managers may lack the necessary skills, as well as the

economic and organizational resources, to manage and develop tourism facilities

effectively. All profit made by the concessionaire is income foregone by the park

agency, though concessions can be a revenue-generating tool for protected agencies.

An alternative option is to restructure the park agency along more business-like lines, as

in the case of a parastatal. The South African National Parks (SANParks) determined

to blend the public goals of environmental conservation and commercialization by

becoming a parastatal in 1926 though the National Parks Act (Fearnhead, 2007).

The private sector may be able to deliver specialized services and products because:

It has the ability adapt to changing markets needs and conditions;

It may have more flexibility in labor contracts;

It can innovate and respond quickly;

It can easily raise capital and other funds;

It may have more freedom in setting price levels; and,

It is not be constrained by government policy.

Managers must also consider the group to involve and suitability of the service for a

concession. The private sector will only become involved in providing the service if it


7

promises to be profitable; they will not operate during low visitation periods, nor will

they provide services at average or subsidized prices. In contrast, the protected area

agency may grant concessions to non-profit groups, such as NGOs or a local

community. In both cases it may be necessary for the protected area agency to support

the organization in building capacity, such as providing business training workshops.

Nonprofits can provide the park with many benefits (J. Lohuis, pers. comm.). The

public is more likely to perceive the park agency as behaving in a fiscally responsible

way when nonprofits are involved in service provision. Further, the positive status of

the non-profit can encourage more people to volunteer with the park, thereby

increasing the inflow of expertise and assistance available to park managers (J. Lohuis,

pers. comm.). In Canada, non-profits are also advantageous partners for park

management because non-governmental organizations are eligible to receive

government grants (e.g. Trillium grant) (J. Lohuis, pers. comm.). Park agencies must

carefully consider the contracting out of services to non-profits, however, as this

relationship does not always involve a service agreement (J. Lohuis, pers. comm.).

This can lead to a significant loss of control for the park agency.

All services by third parties will be governed by a contract. A contractual

agreement, which is limited to a certain time period (i.e. term), must be adhered to by

both parties involved. The proper legal authorities must also be involved in the

establishment of the contract. Memmel (1963) stated that the heart of a contract is the

scope of the activity to be provided by the concessionaire. Enforcement of this activity

is based on the existence of verifiable measures (e.g. number of visitors), as specified by

the park agency (Lin, 2000). Verifiable measures also reduce the likelihood that

external organizations will breach the contract in favor of their individual goals (Lin,

2000; Wyman et al., 2011). However, the government often lacks complete information

on the external companies, making it challenging for them to create complete contracts

(Lin, 2000). This is especially true in the case of long-term contractual agreements.

Managers can also use websites to attract, inform, and regulate external companies

operating within the park setting. External organizations must be made aware of local

legal issues (e.g. taxes, subsidies, land tenure, zoning regulations, etc.) as well as the

social, cultural, and political context of the protected area. Some park agencies have

excellent websites which communicate effectively on these topics, either through

separate web pages or complete Portable Document Format (PDF) documents. Table 1


8

illustrates how several prominent park agencies use their websites to create or maintain

relationships with external organizations. Website links are provided for each.

Table 1. Highlights of park agency websites and related link.

Park agency and website link Description of website highlights


(United States of America)

http://www.nps.gov/commercialse

rvices/regulations.htm

Allows concessionaires to review relevant local, regional, and

national regulations (Thompson, 2009).

Thompson (2009) states that they offer staff an 800-page

manual to guide interactions with concessions. Chapter 10 of

this manual can be found online (Management Policies,

2006).

Provides information regarding operational tools, such as

environmental management, public health, and risk

management.

Parks Canada (Canada)

http://www.pc.gc.ca/eng/index.as

px

Provides a good overview of general park services available.

Does not provide resources to potential concessionaires,

such as an online login.

Does not provide information regarding the contract selection

and award process (Thompson, 2009).

Does not list concessionaires or contracts currently under

review or use in the parks.

New South Wales Parks and

Wildlife Service (NSW) (Australia)

http://www.nationalparks.nsw.gov

.au/

Links to an external website, New South Wales Government

Environment and Heritage (2011a), which provides visitors

with information on running commercial activities in national

parks.

Allows potential tenders to register and receive email

notifications about opportunities.

Thompson (2009) states that they offer staff a 300-page

manual for dealing with the legislation, policy, procedures,

and processes associated with concessions.

Parks and Wildlife Service

(Tasmania)

http://www.parks.tas.gov.au/index

Provides information for the general public, but less content is

aimed specifically at potential or current concessionaire.

Lists approved operators within the parks (Thompson, 2009).


9

.aspx?base=1

Great Barrier Reef Marine Park

(GBRMP) (Australia)

http://www.gbrmpa.gov.au/

Provides information on how to obtain a permit.

For those individuals or groups with a permit, there is an

online guide called Onboard: The Tourism Operators

Handbook for the Great Barrier Reef (Great Barrier Reef

Marine Park Authority, n.d.).

Alaska Department of Fish and

Game (ADFG) (Alaska)

http://www.adfg.alaska.gov/index.

cfm?adfg=license.main

Provides a well-ordered and extensive website which

dispenses licenses and permits to individuals, groups, or

guides interested in hunting within the State of Alaska.

Offers an online manual for those individuals or groups

interested in dispensing permits and licenses to the general

public (i.e. a license vendor); this covers everything from sport

fishing to sport trapping.

1.1 What are concession contracts, leases, licenses, and permits?

This section will describe the definitions and key attributes of concession contracts,

concessions, leases, licenses, and permits. These tools are flexible, based on contract

specifications, and are used differently across and within international park agencies.

Also addressed here is the issue of the contract and how the contract length has

implications for park-concessionaire interactions.

A concession is a privilege given to a third party to operate a special activity or

program. A park concession can be defined as any public park facility of a food,

merchandising, or public accommodation type which is owned, operated, or

maintained by a public agency or leased out to a private individual or corporation.

The primary function of the concession is a public service with a by-product of some

profit to those parties responsible for its ownership, operation, or maintenance.

Concession contracts have historically been monopolistic in nature, where only one

private company provides the service or product (Lin, 2000). The Maid of the Mist, a

concession operated within the Niagara Parks Commission, provides a good example of

the monopolistic nature of contracts (J. Lohuis, pers. comm.). Exclusive contracts like

these were initially encouraged because it was the only way that concessions could

invest large amounts of capital funding into the park infrastructure (Quinn, 1996;

Malatesta & Smith, 2011). National parks in the USA, such as Yosemite National Park,


10

initially had a large number of contractors who consolidated over time, leaving behind

only a few very large corporations. More recently, the concessionaire is usually chosen

by competitive bidding to avoid this monopolistic situation.

A lease is a contractual agreement in which one party conveys an estate (i.e. land

and facilities) to another party for a specified, limited time period. Typically, there is

an exchange of something of value. The lessor retains ownership in the property while

the lessee obtains rights to use the property (Legal Dictionary, 2012c). Basic facilities

such as campgrounds are typically owned by the protected area and leased to the

private sector for a certain period of time. The facilities may also be constructed by the

external organization, donated to the park, and then leased back to the concessionaire.

Once the lease term is up, the park must decide whether the facility will be severed and

removed, vested in the crown, or renewed with the existing operator (Thompson, 2009).

In California State Parks, for example, all capital improvements revert to the State at the

end of the contract (Luscutoff, pers. comm.). Similarly, in South Africa national parks

all capital investments by private companies revert to the nation at the end of the 20

year contract period (Castley, pers. comm.; Fearnhead, 2003; Wyman et al., 2011). In

USA National Parks unique legislative commitments give the lessee Leasehold,

Surrender Interest, the old term was Possessory Interest, based on the amount of capital

investment made (Pendry, pers. comm.).

Licenses give permission to a legal competent authority to exercise a certain

privilege that, without such authorization, would constitute an illegal act (e.g. a trespass

or a tort). A certificate or document confers permission to engage in the otherwise

proscribed conduct (Legal Dictionary, 2012a). Licensing may be seen by the public as

a form of quality control and might require extra due diligence by the competent

authority, in contrast to a permit (J. Lohuis, pers. comm.). Possession of the land is not

granted through the license (Memmel, 1963). Licences give park authorities the ability

to screen applicants to ensure that they are suitable to fulfill a certain activity. Usually

the number of licenses is limited to the level of market demand for the park. Licences

are often long term; for example, a multiyear permission to operate guiding services in

a park. Unlicensed vendors are problematic for the parks; in New York, food vendors

without licenses go unregulated by park authorities, and money raised is not returned

to the park (Greco, 2011). Consequently, food quality and service quality is unknown

by the park agency (Greco, 2011).


11

Permits are a temporary form of permission. They acknowledge that the recipient

has approval to do a lawful activity within the park space (Memmel, 1963). For

example, a person might be given permission to provide a service for a day or a week.

Permits normally expire within a short length of time. Usually the number of permits

is large and limited by external factors (e.g. social and/or environmental carrying

capacity of the park). In most cases, permits are given to anyone who pays the fee.

Permits are often given to tour companies that provide a tour experience within a park.

A contract is an agreement between two parties in which both parties agree to do

something in return for a benefit to both parties. Contracts can be either written or

verbal, but for important activities it is much preferable for the contracts to be written.

Written contracts make the settlement of disputes more ordered. Contract law is

important to all business dealings. There are several elements to any contract:

1) An offer;

2) An agreement of both parties to the offer;

3) Promises to perform according to the contract;

4) Financial and value considerations;

5) Timing commitments;

6) Performance terms; and,

7) Actual performance (Legal Dictionary, 2012b).

The concession, lease, license, or permit contract will outline the rights and

responsibilities of each party. It is important that the responsibilities of each partner

are listed in sufficient detail. Having a clear idea of these responsibilities allows for the

regular measurement of contract performance. Penalties for non-compliance must be

clearly stated; SANParks uses performance bonds (Fearnhead, 2007). There must be a

procedure outlining the rules for cancellation of the contract due to non-compliance

with contract stipulations (Eagles et al., 2002). Issues covered in the contract include:

1) Trading hours;

2) Standards for customer service;

3) Environmental practices;

4) Pricing policy and fees;

5) Public access to facilities;

6) Insurance needs;

7) Infrastructure maintenance responsibilities;

8) Infrastructure capital improvements;


12

9) Signage;

10) Advertising;

11) Accreditation standards of staff and facilities;

12) Design of facilities;

13) Monitoring, incentives and enforcement;

14) Hiring practices; and,

15) Role of local communities.

Contract length affects park-concessionaire interactions; the duration of a contract

can be extended by legal manoeuvres such as the right of first refusal or right of

preference. Contract length may be determined by park policy or legislation.

Typically, contract lengths are 1 year, 5 years, 10 years, and 20 years. The right of first

refusal allows the incumbent concessionaire to match the best bid by a potential entrant

(Chouinard, 2005). Beginning in 1916, the National Park Service in the USA used

rights of first refusal to encourage the privatization of park services (Quinn, 1996; NPS,

2012a). Stephen T. Mather championed this movement by creating the regulated

monopoly in parks, which allowed large concessions to ignore park conservation and

visitor-service goals in favor of greater profit (Quinn, 1996; Malatesta & Smith, 2011).

The right of first refusal has since been replaced in the NPS by more competitive

auctions of concession contracts coming up for renewal (Chouinard, 2005). However,

concessionaires retain financial interest in capital improvements, so that any new

concessionaire must pay the previous operator for such improvements. The cost of

these improvements is not depreciated over time. This concept is referred to as

compensable interest. This peculiar Leasehold Surrender procedure reduces bidding

competition considerably in US National Parks.

Another method through which concessionaires are able to extend their stay in the

park is the right of preference. Concessionaires may have a right to automatic renewal

of the contract if certain contract obligations are met, but most frequently, there are no

special rights of renewal. SANParks does not allow this right (Fearnhead, 2007). In

the USA, contracts that have gross income less than US$500,000 allow the holder to

match the best bidder at the time of contract renewal, thus granting preference. In

Canada, this right of preference is used much more broadly. There are advantages of

this system in that it reduces the need for contract bidding procedures within the park

agency and external organization. It also keeps a functioning small business in place.

However, it also reduces competition.


13

Table 2 summarizes contract length in international concessions. This information

only relates to the average concession contract duration (i.e. individual contracts may

vary in length). There is also no way of knowing what each organization classifies as a

large, medium, or small organization. Consequently, this is a general guide only.

Table 2. Concession contract duration in various park agencies worldwide.

Park agency name Average duration of contract Additional notes regarding

contract


(United States)

Contracts normally 10 years, but

20 years possible if capital

improvements are needed (NPS,

2012d)

Concessions Management

Improvement Act (1998) states that

only a competitive selection process

be used to award a concession, as

well as reducing contract duration

(Thompson, 2009)

New South Wales Parks and

Wildlife Service (NSW)

(Australia)

Large-scale concessions are 45

years, while medium-scale

concessions are issued on a

5-year basis (Thompson, 2009)

Duration of the contract directly

reflects the amount of capital raised

by the concession and returned to the

park agency (Thompson, 2009)

Parks and Wildlife Service

(PWS) (Tasmania)


years in duration, while

small-scale concessions are only

5 years (Thompson, 2009)

Banks are pushing for a 50 year

duration to the contract, to allow for

proper financing (Thompson, 2009)

South African National Parks

(SANParks)


years (Fearnhead, 2007; African

Safari Lodge Foundation [ASLF],

2012)

Private operator gains exclusive

commercial use rights within park, but

facilities revert to SANParks upon

contract completion (Fearnhead,

2007)

South African parks differentiate

between concession contracts with

investment (total of 20 years) versus

those without investment (total of 10

years) (Wyman et al., 2011)

National Parks

Administration (Argentina)

All contracts are 10 years with

additional 5-year renewals

possible (Wyman et al., 2011)

For example, the Pilego Panuelo Isla

contract is a total of 15 years (Wyman

et al., 2011, pp. 922)

National Parks of Peru All contracts are limited to no more

than 20 years (Wyman et al.,

Contract is affected by the

relationship between the park service


14

2011) and the concession (Wyman et al.,

2011)

Both the NPS and the Department of Conservation (DOC) in New Zealand are

experts at managing complex concession contracts. The NPS has a Commercial

Services Program (CSP) which administers 520 concession contracts annually, and

provides a diverse array of park activities (NPS, n.d.; NPS, 2012a; Pendry, pers. comm.).

Activities carried out by the CSP are publically available online and overseen by a

Concessions Management Advisory Board (NPS, n.d.). This program oversees 25,000

concession staff members; in contrast, only 20,000 people work for the park service

(Pendry, pers. comm.). The DOC has, similarly, created a Commercial Business Unit

(CBU) which responds directly to the need for private sector help within the park

system. The presence of coherent park agency policy within the umbrella of these

organizations has made the management of concessions easier for both park agencies.

Protected area agencies can also offer the concessionaire an Incidental Business Permit

(IBP) for their operations. The IBP is a simple, written form of authorization that

allows for the operation of a concession business in a protected area. It specifies that

the concessionaire cannot operate commercial facilities within the protected area; all

commercial facilities must exist outside the park boundaries, and no money can be

collected from the sale of products within the park. The IBP lasts from 2 to 3 years,

must be renewed after expiry, and is not transferable. The fee for this permit is

determined by specific government departments and consists of a non-refundable

application fee, an administrative fee, a protected area fee and (potentially) a

monitoring fee.

When applying for the IBP, the concessionaire will be asked to submit several

documents to the park agency. The first of these is an application form provided by

the park agency, along with:

1. Proof of liability insurance;

2. A proof of workers compensation insurance (if required by law);

3. Business license number;

4. Proof of permit fees paid; and,

5. Proof of compliance with all applicable regulations.

If the concessionaire is hoping to operate directly within the park, they must apply

for a concession contract rather than the permit.


15

1.2 What is the process for deciding upon a concession, lease, license, or permit?

The park manager may become aware of the need for a concession contract, license,

or permit through a user survey, services requested by the public, proposal by a

potential concessionaire, a request by staff, or a need identified in a relevant

management or master plan (Larimer County Department of Natural Resources, 2010).

The source of the request for an external provider can influence which legal tool is used;

for example, park staff may want a flexible tool that is relatively easy to monitor, such

as a centralized permit system. A concessionaire seeking to build infrastructure may

wish to gain a long-term concession contract. Consequently, the source of funding for

the park-external provider relationship is another important influence on which tool is

chosen. In Brazil, concessions are used when a third party invests in the park.

Otherwise, permits and licenses are used. However, Brazil has no specific law

governing concessions in national parks (Zoroski, pers. comm.).

Similarly, the nature of the good or service provided will influence which legal tool

is used. Guiding activities within the park might require only permits to gain access to

sensitive natural areas within the park; food services, in contrast, may require the

development of infrastructure and thus need a concession contract. Tendering is a

mechanism which efficiently allocates scarce rights by providing permits to applicants

interested in facilitating park services (Thompson, 2009). The process of tendering is

useful to park managers attempting to identify the right legal tool to use.

Tendering begins with a Request for Proposals (RFP), which helps the park agency

determine the type and quality of service providers available. In the NPS, the RFP is

preceded by the Request for Qualifications (RFQ) to ensure that the external company

meets a minimum of required management and financial qualifications (Thompson,

2009). If a tender results in a lease, the degree of authorization provided to the private

company or individual may not be equivalent to that provided by a concession contract

(Thompson, 2009).

In South Africa, a tender for tourism lodge concessions in Bwabwata National Park

was released on October 8th, 2010 (Kyaramacan Association, 2010). South African

parks attempt to achieve both environmental conservation and economic development

through sensitive commercialization of park facilities (Fearnhead, 2007). The

Kyaramacan Association had gained a 20-year concession contract by the MET, and was

seeking proposals from private parties to help develop and implement the concession


16

(Kyaramacan Association, 2010). The tender process helped to attract interested

parties to participate in a large-scale concession operation. This provides an insight

into the complex relationships which exist between the operation of a concession

contract, lease, license, and permit.

1.3 What is the process for selecting an external provider?

Once the park has determined that a certain service or program should be offered,

the park manager must begin the process of finding a concessionaire by advertising for

bidders. The complete list of steps involved in this process includes: release of a public

notice, design of a prospectus, competitive bidding, and selection process based on the

qualifications of the bidder. Selection procedures for profit-making companies

typically involve competitive bidding; this requires a level playing field for all

participants and can be both time-consuming and expensive for both parties.

The contracting-out of a concession can take anywhere from 25 to 40 weeks; if there

are political or legal appeals, this timeline will be extended. Table 3 provides a

detailed overview of the process from the perspective of the park agency.

Table 3. Tasks and schedule in choosing a concession (Havitz, 1999).

Tasks for the park agency Time required for activity

Develop strategic plan and timetable

Draft the contract

Produce the specification

Prepare the Request for Proposals

Produce tendering instructions

Produce an information package for bidders

Advertise the request for bids

Prepare for and conduct bidders meeting and site

meeting

Receive proposals

Evaluate proposals

Research proponents financial status and seek

technical reference

Short-list the best proponents

Interview the short-listed proponents

Select the best proponent

4 weeks

4-10 weeks

8-20 weeks

1-2 weeks

1-2 weeks

2-4 weeks

1-2 weeks

2-4 weeks

3-6 weeks

3-5 weeks

2-4 weeks

1-2 weeks

2-3 weeks

1-2 weeks

1-2 weeks

1-2 weeks


17

Negotiate final details

Sign the contract

Implement the contract and monitor compliance

Length of contract

The first stage of this process is to design a public notice about the contract

opportunity. This should make the park site appear attractive to potential investors

(Fearnhead, 2007). An advertisement for the service or product should state: the name

and location in which contracts are available; the type of service to be provided;

information on how to obtain a bid information package; a general description of what

the information package will contain; and, the deadline for submission of proposals to

the department. Avenues for this notice may be through newspapers, professional

magazines, electronic media, or a press conference for highly-valued bids. In the NPS

(1998), the prospectus must be made publically available in at least one local or national

newspaper or trade publication, and/or Commerce Business Daily. Recently,

government agencies maintain websites that provide notices of contract opportunities

(see Table 1). The entire process of advertising for and selecting a concessionaire

should be open to the public to ensure fairness of bidding and subsequent monitoring

and support from local communities.

Next, park managers should use their service or product needs to create a

prospectus. This document should be detailed enough to allow bidders to create a

feasible, relevant bid application. Concessionaires often base their income projections

on the prospectus, and disputes can erupt between park and external organization

when this document is not sufficiently detailed. The content of a prospectus will

describe the physical location and size of the operation, as well as plans for constructing

the infrastructure in a way that conserves natural and environmental features of the

landscape. The prospectus will also cover:

1. Layout and services desired for facilities;

2. Anticipated future markets of the park;

3. Current and future facilities provided by the park agency;

4. Contract policy, agreement, terms, and conditions;

5. Requirements of initial and long-term expected investment;

6. Requirements of the bid plan, including format, items, deadline, and references;

and,

7. The selection procedures.


18

In the NPS, sustainable environmental practices are one of the central aspects of the

planning and prospectus development process (NPS, n.d.). Every concessionaire is

required to document their Environmental Management Programs (EMPs), which are

audited by third parties (NPS, n.d.). For example, operational or maintenance plans

may be required to meet solid waste and recycling requirements, based on industry

standards maintained by the CPS (NPS, n.d.). The competitive contracting process of

the NPS has resulted in many innovative environmental management practices that go

beyond basic sustainability requirements (NPS, n.d.). SANParks, similarly, requires

that concessions create EMPs for construction and operational phases; these plans may

change over time in response to new policies and approaches (Fearnhead, 2007).

In response to the prospectus, bidders will provide documents (i.e. bids) describing

their expected methods for meeting each of the park agency requirements. The

process of bidding is usually competitive; each bid is assessed according to a system of

points for each requirement, based on a matrix of requirements given by the park

agency. The bid will describe the external companys:

1. Marketing strength and target markets;

2. Pricing records and policy;

3. Financial strength for the investment, loan, and operation;

4. Financial arrangement and budget for the plan;

5. Qualification of the bidder;

6. Contract length;

7. Expected requirements of the operation;

8. Timing of the operation;

9. Management performance and strength; and,

10. Partner share of responsibility for park promotion.


19

Figure 2 . Bidding and selection procedure, Lin (2000, pp. 27).

The potential concessionaire will begin the process of bidding by studying the

public notice and prospectus, after which they will typically tour the protected areas

facilities. Next they will submit their proposal and attend an interview. Lastly, the

concessionaire must study the contract to have a clear understanding of all regulatory

and contractual provisions. SANParks ensures that all bidders have relevant and

timely information throughout the process illustrated in Figure 2 (Fearnhead, 2007).

Concessioners may or may not negotiate the contract terms before signing it.

Selection factors which are most influential in determining which external

organization is chosen can be either primary or secondary. Primary selection criteria are

usually related to how closely the bid responds to park agency environment- and

visitor-related objectives, past experience of the bidder in providing these types of

services, the financial situation of the bidder, and the proposed minimum franchise fee.

In the NPS, the principle selection factors include (NPS, 2012b):


20

1. Responsiveness of the proposal to the objectives described in the prospectus of:

a. Protecting and conserving the resources of the park area;

b. Providing necessary and appropriate visitor services at reasonable rates;

2. Experience and related background of the offeror, including past performance

and expertise in the same type of visitor services;

3. The financial capability of the offeror to carry out its proposal; and,

4. The franchise fee and other forms of financial consideration.

The secondary selection factors for the NPS include the quality of the offerors

proposal to conduct its operations in a manner that furthers the protection and

conservation of the park area and other resources through environmental management

programs (e.g. energy conservation, waste reduction) (NPS, 2012b). Park-specific

factors are also taken into account in the secondary factors (NPS, 2012b).

For the choice of best bid, fair and objectives procedures are required. Typically,

the agency uses a matrix of requirements, with each bidder given points according to

how well the bid fits the agencys requirements. SANParks ranks applicants

development, environmental, and business plans on a pass-fail basis; they need to rank

over 8 points out of 20 points total to be selected (Fearnhead, 2007). The bid that gains

the most points is offered the concession agreement. Public announcement of the

winning bidder is common. Thereafter, the park manager works with the

concessionaire to establish rates for tourism services and products, level of service

provision that they will hold within the park, and a range of other important issues.

There is often considerable negotiation needed after the contract is given.

1.4 How should concessions be regulated?

Concession contracts aid management by addressing financial, legal, and

environmental norms critical to the success of the park-concession relationship. With

regards to financial issues, the contract should outline the concessionaires required

capital investment, concession fees, and visitor fees.

One major aspect of a concessionaires use of government buildings is the ongoing

cost of maintenance and capital improvements. Who pays for these expensive

activities (the government or the concessionaire) is a major policy issue. Contracts will

specify whether or not the concessionaire will be compensated for any infrastructure


21

they construct during their term in the park (Wyman et al., 2011). Government may

have to pay for the initial value of the updating to the structure, less depreciation and

inflation considerations (Wyman et al., 2011). New concessionaires may also be

burdened with the cost of paying the previous concessionaire for the cost of updating

the facilities (Wyman, et al. 2011). Possessory interest is a value obtained through the

upgrading of the capital component of infrastructure. In most jurisdictions, the

interest is depreciated over time, often in the same fashion as allowed in tax law. Early

in the development of Yellowstone National Park (YNP), the concessionaire known as

General Host provided grossly unsatisfactory performance; contract provisions

allowed the NPS to remove them, but had to pay for their possessory interests and

properties (Quinn, 1996). A large possessory interest from capital improvements will

reduce the likelihood that new contractors will be able to bid successfully against

current ones. More recently the National Park service has use the term, Leasehold

Surrender Interest, rather than the older term Possessory Interest. Therefore,

infrastructure can be a complicated and costly issue within park management

contracting policy.

External companies operating within the parks usually pay a concession fee to the

park agency. These fees, in long-term contracts, are generally reviewed by the park

agency every 5 years to determine if adjustments are required. There are four methods

for determining the level of this fee: 1) market value, 2) similar opportunities, 3) value

of services, or 4) percentage of concessionaire income. Depending on the legislation

and extenuating circumstances, concession fees may be set at market value. The

market value is considered to be the price a willing buyer will pay a willing seller for a

concession opportunity. As the market is self-regulating, supply and demand for the

good drives the price which buyers are willing to pay for each service or product. For

example, Ecuadors Galapagos National Park charges a concession fee to each boat (i.e.

an operating licence), which vary from US$4,000 to US$20,000 a year (Naranjo and

Rueda, pers. comm.). This method tends to be the least frequent method of setting

concession fees. More often, the fees are determined by evaluating similar concession

situations and using their fee, or valuation of the specific service or good provided.

These two options are determined in direct negotiation with the concessionaire.

The final method for determining the concession fee is through charging a

percentage of concessionaire income. This method is usually rife with abuse; the

operator can find ways to avoid counting admissions (e.g. by turning off systems), and

the manager should ensure that there are incentives and controls in place to avoid this


22

kind of activity (J. Lohuis, pers. comm.). Normally, this value is calculated through

formulae such as percentage of gross income or a per capita fee. In the DOC, New

Zealand, the following calculations are used to determine the concession fee (excludes

Government Sales Tax [GST]) (IUCN, 2000, pp. 50):

1. Guided tours = 7.5% of gross income (often set at $x + GST per person per half

day, and $y + GST per person per full day);

2. Helicopter landing rights = 5% gross income; and,

3. Hotels, ski areas etc. (lease of bare land only) = 3 to 5% gross income.

In Belize, the Protected Areas Conservation Fund (PACT) collects revenues and

taxes earned from tourist activities and visitor use fees (Wyman et al., 2011). The

PACT receives 20% of the revenues earned by the non-governmental organizations

co-managing the park, and 70% of the fees are used for managing the protected area

(Wyman et al., 2011, pp. 924). South Africa uses an annual fee that is based on the

percentage of gross revenue bid by the concessionaire during the bidding process

(Wyman et al., 2011). In addition to the concession fee, the park agency may charge

performance bonds; these bonds cover costs incurred by the government when the

concessionaire fails to perform as expected (Wyman et al., 2011). In Columbia,

performance bonds are valued at US$475,000; Chile values them at 10% of the annual

pay value of the concession (Wyman et al., 2011).

Many of staff involved in the collection of concessionaire income note that it is

challenging to accurately obtain a percentage of the external operators income. There

is a tendency for the concessionaire to under-report income. One author, Eagles, when

working with the Director of a park agency in Africa, found that the agency was

suspicious that a concessionaire had two sets of books, one for their own purposes and

one for the agency to see. In this case, the Director set up an independent data

collection system to determine the visitor flow through the facility, in order to calibrate

the concessionaires statements on visitor numbers. This illustrates how the park

agency often loses control by outsourcing, and must invest money and staff into

monitoring programs.

The timing of the concession fee payment affects how the external company chooses

to operate. The fee may be paid as an annual set fee or a flat fee in conjunction with a

royalty. Structuring the fee based on time periods might provide the concessionaire

with incentives to operate at specific time (e.g. lower fees during low volume periods).

There are also some occasions in which the park agency subsidizes the concessionaires


23

product provision; for example, during periods of low visitor volume. If the fee is

gradually increased over time, the external company may be able to increase its visitor

fees incrementally. This avoids public backlash against the concessionaire and park

agency caused by sudden price increases.

The amount charged to visitors is one of the most difficult and controversial aspects

of park-concessionaire relationships. Visitor use fees charged by concessions can

contribute to visitors satisfaction levels with their park experience, which can have

implications for the long-term financial viability of the park system. Visitor fees are

also identified as a social equity issue; unreasonably high fees can prevent minority

groups from visiting the park. Park agencies, since they are operated by the

government, are often expected to provide low or subsidized rates for park services.

In contrast, private companies entering the park are seeking to make a profit. In 1982,

recreation researchers were already commenting on the profit-orientation of many

concessioners entering parks in the United States (Quinn, 1996). Avoiding concession

monopolies, designing complete contracts, and regulating concession pricing are three

methods the park agency can use to avoid exorbitant visitor prices. The NPS, for

example, is unique in that all services and products provided by concessionaires have

regulated prices (Thompson, 2009). The cost of establishing these prices must be very

high, as there are over 500 concession contracts and tens of thousands of products sold.

The determination of the amount that can be charged is done by NPS staff members:

The reasonableness of a concessioners rates and charges to the public

will, unless otherwise provided in the contract, be judged primarily on

the basis of comparison with current rates and charges for facilities and

services of comparable character under similar conditions. Due

consideration will be given to length of season, provision for peak

loads, average percentage of occupancy, accessibility, availability and

costs of labour and materials, type of patronage, and other factors

deemed significant by the NPS Director (NPS, 2012a, p. 146).

Another example of the difficulty in implementing and regulating visitor fees is

illustrated in Roger Williams Park, located on Rhode Island in the United States.

Although this urban park offered extensive facilities (e.g. a zoo, greenhouse), the

family-operated concessionaires generated only $3,000 per year in income from over 2

million yearly visitors (Project for Public Spaces [PPS], 1997). After the park sought

new concessions, an entrance fee was designed (PPS, 1997). Park managers were


24

careful to ensure visitors knew that 50% of gross revenue from concession operations

was going back into restoring the parks dilapidated roads and historic buildings (PPS,

1997). This made the fee more acceptable to visitors, while improving the overall

landscape of the park.

Contracts are also important in identifying legal issues within the park-concession

relationship. These legal issues describe the expectations of the concessionaire as well

as the enforcement and monitoring procedures of the park if the concessionaire does

not fulfil their duties. Park agency rules will be stated in the contract and define:

1. The expected training level of staff members (e.g. with regards to environmental

preservation, visitor services, etc.);

2. The required hours of operation and range/level of services;

3. Pricing policy and degree of competition between concessionaires; and,

4. Arrangements for monitoring of concessionaire activities by the park agency.

It is not unusual for concessions operating within the park to disregard laws set to

govern operations within the park. This can result in illegally constructed facilities,

untrained staff, and negative public and visitor perceptions of the park as a whole.

Consequently, it is important that the contract set clear and legally-justifiable

enforcement methods. This also requires that the park invest personnel and financial

resources into regular monitoring of the external organization operations. Incentives

may also be offered to encourage proper behaviour by the concessionaire.

Monitoring is important, but expensive. The authors note that in discussions with

many park managers in the preparation of this handbook the issue of monitoring was

highlighted as being problematic. Many park agencies do little to no monitoring.

They rely almost completely on concessionaire-generated figures, and only react when

complaints are received. Given the lack of transparency with most contracts, it is very

difficult for the public to serve as an effective monitoring force. Provision of

technology is important and may have a direct impact on contract terms, how easily the

park can audit the concessionaires daily activities, and the overall success of the

licensee-concession operator in the park environment (J. Lohuis, pers. comm.).

Enforcement procedures are only as effective as their implementation.

Enforcement is a response to the external organizations failure to adhere to the

contract, and penalties for these failures should be formally documented in agency


25

policy. Penalties are graduated based on the degree of offence (Wyman et al., 2011).

They begin with a written warning, move into financial penalties (e.g. fines), and end

with cancellation of the contract (Wyman et al., 2011). In Perus Tombopata Protected

Area, concessionaires who have breached or failed to fulfil the contract are charged the

equivalent of 20% of the value of unpaid obligation, and may suffer a 2-year suspension

(Wyman et al., 2011). Argentina has a series of graduated fines for concessions,

depending on the severity of the problem (Wyman et al., 2011). Termination of the

concession agreement before the end of its term can occur in response to gross violation

of the concession agreement or financial insolvency of the contract.

The process for suspending, restricting, or revoking the allowed business activity of

the third-party involves three distinct steps in the NPS. First, the park manager

notifies the company in writing and gives them an opportunity to avoid future

violations and/or address concerns with specific employees (USDI, 2009). Next, the

external company is given the opportunity to explain the reason and circumstances of

the violation (USDI, 2009). Lastly, the external company is given the opportunity to

appeal the charges; the appeal must be submitted in writing within 30 days of receipt of

the decision (USDI, 2009). The NPS Regional Director may informally meet with the

appellant to reach a decision (USDI, 2009).

Political influence can sometimes limit the effectiveness of enforcement procedures;

consequently, park agencies should have some form of regular monitoring in place.

One of the authors, Eagles, met with 5 state park directors at a combined US and

Canada federal/state/provincial park directors meeting many years ago. These

directors stated that concession management was their single largest management

problem. They commented that when contractors deviated from their contractual

responsibilities, many went political to elected officials when called to account by the

park managers. They complained that the park officials were unnecessarily hounding

the business people and getting in the way of efficient business practices. This was an

attempt to get elected officials to overrule the park managers and to avoid impending

sanctions. Interestingly, these park directors were themselves political appointments,

since senior park management positions in the USA are appointments by the elected

governors of the state. These statements illustrate the complexity and time consuming

effort involved in enforcing concession contracts. Monitoring is essential as a basis for

enforcement measures.


26

Monitoring of the concessions operations can be done either by the park agency

staff or independent, paid evaluators/auditors. Lohuis (pers. comm.) states that food

service audits, financial audits, and legislative compliance audits should be performed

annually at a minimum; legislative compliance checks should include police checks for

criminal charges, documented evidence of training, and comprehension of training in

concession staff. Ziegler (2011) suggested that concession contracts should be

independently reviewed to ensure that proceedings are transparent and politically

accountable. Transparency occurs when a contract action, or other form of

government action, is visible to the public and in compliance with law and regulation

(Fearnhead, 2003; Ziegler, 2011). Political accountability, then, is the degree to which

the action is monitored or controlled through the political process (Ziegler, 2011).

Having a period of public commentary on a concession contract, before implementing

it, might be a more desirable option than regulation (Ziegler, 2011). A careful,

well-crafted contract can overcome many of the difficulties in regulation and can reduce

monitoring requirements over time (Ziegler, 2011). When monitoring is required, it

should focus on the areas, facilities, or services where:

1. Visitors have indicated concerns;

2. New management actions are occurring;

3. Effects of management are unknown; and,

4. Where information is lacking.

In Mozambique, there is no legal rule which clearly states how administrative law

contracts are to be disclosed to the public (Rita Casimiro, pers. comm.). Although

release of this information in an official gazette or under justified request could provide

the public with the necessary information, the current state of affairs is secrecy (Rita

Casimiro, pers. comm.). Consequently, there is no sharing of information with third

parties, a potential for corruption, and the volume of public input and monitoring is

limited (Fearnhead, 2007). Limited transparency in these contracts also means that

there is little to no understanding of their social and economic impact (SNS, 2011). In

the NPS, however, financial and employment information is regularly collected from

concessionaires and shared with the public online (Thompson, 2009). This ensures that

the concessionaires activities are understood and monitored by all parties.

Monitoring of concessions can be done by local communities. Local people share

an interest in the park resources because of their proximity (Fearnhead, 2007).

Encouraging them to monitor concession activities could allow them to feel involved in,


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and thus more supportive of, park management. In Namibia, concessions are used as

an economic development tool to benefit conservation and empower communities

living in or around the parks (Thompson, 2009); in South Africa more generally, 20% of

concessions are awarded based on their promises to empower local communities

(Fearnhead, 2007, pp. 307). South African concessions are also tendered to

disadvantaged communities where the greatest financial needs are felt (Fearnhead,

2007). Similarly, Chile grants concessions directly to communities and implements

community-run tourist activities in the locations surrounding protected areas (Wyman

et al., 2011). Chinas Sichuan Province has contracts which assure community

participation by requiring concessions to hire at least 20% of their staff from local

communities (Wyman et al., 2011, pp. 920). Involving local people from the beginning

of the concession development can thus prove more important than post-hoc

monitoring.

Lastly, contracts outline expected environmental conservation methods of the

concession operation. Concessionaires must comply with the park agencys

environmental laws in all aspects of their operations. This includes facility planning,

construction, implementation, and daily activities. During the planning stage,

environmental issues must be considered within the zoning application, development

permit, building approval, and business operating license. Park agencies are

responsible for carefully regulating the decisions made during the planning stage.

Without appropriate planning or best practices in place, tourism concessions can create

problems such as waste, habitat destruction and the displacement of local people and

wildlife (Wyman et al., 2011). In Perus Tombopata Protected Area, concessionaires in

violation of environmental laws must pay full restitution to the state and to third parties

(e.g. local communities) affected by the damages (Wyman et al., 2011). In Argentina,

negative environmental impacts result in contract modifications, expensive mitigation,

or termination of the concession contract (Wyman et al., 2011).

When constructing the site, the park agency must ensure that the external

organization is preserving the environment by adhering to the following guidelines:

1. Excavation activity must be minimized to reduce soil erosion;

2. If possible, energy should be derived from renewable energy;

3. Locally sourced or recycled building materials should be used whenever

possible; and,

4. Sensitive elements of the natural environments, including vegetation and

wildlife, must be protected and preserved.


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During the daily activities of the concession, a multiplicity of methods exists for

preserving the environment. Some suggestions for this purpose are provided below

managers should take into consideration local environmental situations when designing

specific measures:

1. Hazardous or toxic substances should be disposed of and removed as per the

protected area agencys procedures;

2. The use of alternative energy sources such as solar power, wind power, and

other environmentally friendly power sources should be encouraged;

3. Disruption to local wildlife must be kept at minimal;

4. Concern for water preservation must be exercised by;

o Collecting rain water for non-potable uses;

o Installing low-flush toilets;

o Accessing groundwater as a source;

o Re-using sewage effluent/liquids for other uses; and,

o Re-using previously used water (gray water) for other uses.

5. Sound pollution must be minimized;

6. Non-recyclables containers should be avoided in favor of refillable containers;

7. Composting is encouraged; and,

8. All concession staff (including the owner and manager) must participate in

environmental training conducted by a park agency, whenever possible.

Examples of best practices in environmental conservation have been observed in

concession contracts around the world (Table 4). In these contracts, emphasis is put on

developing infrastructure in environmentally sensitive ways,

Concession Guidelines 2012

Documents

Transcript of Concession Guidelines 2012