Hospitality provider’s unique approach helps it outperform the market as it acquires properties and sees upturn in 2010

The worst economy in decades has left most lodging companies reeling from depressed business and vacation travel. Then there is Delaware North Companies Parks & Resorts, which is bucking the trend by outperforming the market and even acquiring lodging properties.

“We’re succeeding because of our strategy to focus on providing stewardship and hospitality in special places, and our ability to do it well,” said Kevin Kelly, president of the parks and resorts division of Delaware North Companies, a $2.2 billion, privately held hospitality, food service and retail provider.

Since 1993, the 95-year-old company has been making a mark in the lodging hospitality sector with its own resort properties and by successfully managing lodging at such high-profile places as Yosemite National Park, where the four-diamond Ahwahnee looms large.

“We want to operate in places that people look to for extraordinary experiences - historic locations and places of incredible natural beauty. But being selective about the right locations is only the beginning. We have created and implemented integrated management systems that are crucial to our success, and we are also leveraging Delaware North’s overall strength and stability,” Kelly said.

It also helps that these locations tend to hold steady in a recession, in part because they are not as dependent on business travelers, Kelly said.

According to Jan Freitag, vice president of global development for the independent lodging industry research firm Smith Travel Research, revenue per available room (RevPAR) was down 17 percent nationally from year-end 2008 to year-end 2009. Occupancy declined 8.7 percent and rate dipped 8.8 percent for the same period.

Meanwhile, Delaware North Companies Parks & Resorts’ rate for its lodging portfolio was up 3 percent in 2009 and RevPAR was flat.

“I think it’s noteworthy to be able to hold rate and RevPAR in this tough economy,” Freitag said. “Not relying on group business is such a positive in this environment, as is having the types of locations that are singular and distinctive.”

Kelly said Delaware North is already seeing positive indications for 2010 and into 2011.

“We’re seeing a significant increase in leisure pace at all of our properties for summer 2010 (May-September), with advance bookings for all properties up a combined 4 percent,” he said. “In our national park business, we expect attendance to continue to be robust with strong visitation numbers that should positively affect our lodging properties in and near the national parks. We expect occupancy and rates to continue to recover throughout 2010 and into 2011.”

Kelly credits several management initiatives that have helped differentiate Delaware North’s approach and equip the company to operate in special places where sensitivity to the environment, to historic preservation and to guests who are often on once-in-a-lifetime vacations is critical:

— GreenPath, Delaware North’s award-wining environmental management
    system;
— An award-winning culinary program headed by a certified master chef
    and with a commitment to sustainable foods;
— GuestPath, the company’s proprietary customer service platform;
— A focus on historic preservation and Leadership in Energy and
    Environmental Design (LEED) standards in construction and renovation
    projects;
— Marketing expertise that allows the company to find and engage the
    guests who value the kinds of experiences Delaware North properties
    offer;
— A central reservation system that maximizes each of Delaware North’s
    lodging properties’ sales capabilities; and
— A commitment to telling the properties’ stories through interpretive
    programs.

Confident in its approach, Delaware North has been - and continues to be - in an acquisition mode, Kelly said.

Since late 2008, Delaware North Companies Parks & Resorts has acquired two hotels in the United States - the Holiday Inn West Yellowstone and The Cottages at Tenaya, a former Appletree Inn next to Delaware North’s four-diamond Tenaya Lodge at Yosemite, just outside the park.

In Australia, where Delaware North has extensive airport and sports hospitality operations, including providing all food and beverage at the Australian Open tennis championship, the company acquired five scenic resorts in August 2009. Among them is Lizard Island, which is on Travel + Leisure magazine’s list of the world’s best hotels and on Conde Nast Traveler’s list of the 100 best places to stay in the world.

Delaware North also added a management contract for The Queen Mary in September 2009 and has already begun bringing back the ship’s luster by undertaking renovation of its primary restaurant, Sir Winston’s, and its meeting spaces. The Queen Mary is dry-docked in Long Beach, Calif.

In all, Delaware North operates nearly 4,000 lodging units worldwide. It is ranked 33rd on Lodging Hospitality’s list of top management companies and is included in Hotels magazine’s list of the 300 largest hotel companies.

The Parks & Resorts division, with more than $360 million in revenue, holds the largest contract in the U.S. National Park Service - for providing virtually all visitor services in Yosemite - and also operates Kennedy Space Center Visitor Complex for NASA.

“Delaware North serves as the guardian of many national and regional treasures, a role we take very seriously,” Kelly said. “We’re hoping to continue to expand in that regard.”