A New York-based management company that took over operation of Honey Creek Resort in June 2016 is struggling to get enough visitors to the state-owned resort in southeast Iowa to meet budget expectations.
Delaware North Companies Parks & Resorts, of Buffalo, N.Y., reported Honey Creek’s total revenue for 2017 was $6.23 million, well over the fiscal 2016 revenue of $5.4 million, but short of the $6.71 million budget planned for 2017, according to a report presented Thursday to the Natural Resource Commission, a seven-member board that provides oversight to the Iowa Department of Natural Resources (DNR).
“They’re having some successes on the ground, but also experiencing some challenges,” said Todd Coffelt, chief of the Iowa State Parks Bureau. “Delaware North is also reaching out to us, saying ‘We need help getting people here.’ We said ‘that’s why we hired you’.”
Honey Creek Resort sits on the shore of Lake Rathbun with a 105-room lodge, 28 cottages, restaurant, indoor water park and 18-hole golf course. The 16,000-acre resort also offers stand-up paddle boards, kayaks, fishing, a water trampoline, biking and naturalist programs.
Although the resort will have been open 10 years in September, it’s never really caught on as the “it” vacation spot in Iowa — possibly because it’s more than 90 minutes from Iowa’s largest population centers.
Coffelt said DNR officials met with Delaware North employees from Buffalo and Fresno, Calif., in January to talk about ways to boost traffic. The company is advertising on billboards in the Des Moines area, but DNR staff helped them figure out which parts of the city might be better for connecting with vacation-goers.
Delaware North is having new cold-weather events, such as Oktoberfest, a Thanksgiving dinner and a father-daughter dance, Coffelt said.
“That occupancy number is a goal they want to bring up,” Coffelt said.
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Under a 15-year contract signed in March 2016, Delaware North is required to pay Iowa 7 percent of gross monthly receipts. Using the gross annual revenue number provided in the report, the share provided to the DNR would be about $436,000. If the resort’s annual gross receipts exceed $7 million, Delaware North will pay the state an extra .5 percent, and if gross receipts surpass $8 million, an extra five percent will be paid to the state.
In turn, the DNR spent about $248,000 since the deal was signed on deferred maintenance, including staining wood exterior and putting new floors in the resort restaurant and lounge.
Delaware North, required to make $2.51 million in capital investments over the life of the contract, spent more than $925,000 since July 2016, the report to the commission shows. This included nearly $500,000 for temporary housing for summer workers, many of which are J-1 visa holders from other countries. The resort hired more than 20 employees from Thailand last summer, the DNR reported.
Big-ticket items Delaware North has yet to do include an outdoor pool and snack bar for $625,000 and lodge room renovations for $647,000.
Central Group Companies of St. Cloud, Minnesota, managed Honey Creek from 2007 to 2016, when the DNR switched to Delaware North.
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