41 



STATEMENT OF KENNETH WILSON, LANDAUER REALTY 



ADVISORS 



Mr. Wilson. Yes. Thank you, Mr. Chairman. My name is Ken 

 Wilson, and I am the National Director of Hospitality Advisory 

 Services for Landauer Realty Advisors. I have approximately 20 

 years of experience in operations management, and consulting to 

 the lodging, food and beverage, and recreational real estate indus- 

 tries. 



Testifying with me here from our firm today is Curt Comelssen 

 who is a senior vice president and an expert in hospitality oper- 

 ations and real estate consulting for government and institutional 

 entities. His focus is on improving the performance and customer 

 responsiveness of public sector hospitality entities by carefully ap- 

 plying the commercial sector operational standards, philosophies, 

 and technologies that our firm moves forward with. 



Landauer is a recognized leader in providing operational, finan- 

 cial, and real estate advisory services to the hospitality industry, 

 both nationally and internationally. Our stafi" annually values and 

 analyzes over $1 billion worth of hospitality real estate in the Unit- 

 ed States and overseas. 



While we maintain a significant presence in the private sector, 

 we have also established a government institutional consulting 

 practice. Our public sector clients include numerous Federal, State, 

 and local agencies with a need for hospitality industry operations 

 and development expertise. 



Our services for these clients generally mirror those for private 

 sector clients with an additional focus on the needs and interests 

 of the affected agencies and the end users. And with respect to the 

 Chairman's request, I would offer the services of our firm as you 

 go forward with drafting this legislation in the future. 



I would like to address three points with regard to the proposed 

 legislation reform. The first is the preferential right of renewal of 

 contracts for incumbent concessioners; second is possessory interest 

 in the private sector; and the third is the ability of a concessioner 

 or lessor to attract financing without possessory interest. 



First, preferential rights of renewal contributes to a noncompeti- 

 tive environment, particularly at the larger facilities and should be 

 reconsidered where appropriate. The National Park Service and the 

 taxpayers are likely losing tens of millions of dollars to the low fees 

 that they receive from their concessioners. The inability to bid 

 these contracts competitively keeps the fee structures significantly 

 below market. 



For example, typical franchise fees in the private sector hospi- 

 tality industry range from 5 percent to 10 percent, and these fees 

 are simply for the right to use the name and the reservation sys- 

 tem only and do not include land grant or land leases. Typical land 

 grant or land leases can range from an additional 5 to 25 percent 

 more depending upon who owns the buildings and the contents. 



Next, the concept of possessory interest is a unique and unusual 

 one in both private and public sector contracts. However, most Na- 

 tional Park Service contracts contain this concept, and it has been 

 supported as a requirement to attract expansion and/or renovation 

 financing. . 



