Keweenaw Mountain Lodge board provides profit-loss update
By Jane NordbergCOPPER HARBOR - The Keweenaw Mountain Lodge board is projecting a net loss of $30,000 for the county-owned facility by Oct. 31.
Joel Tuoriniemi, board chair, presented a year-end report to the Keweenaw County Board of Commissioners at their meeting Wednesday at the Horizons School in Mohawk.
Although operating expenses were down overall by 10 percent in 2008 to date, Tuoriniemi said, revenue has stayed flat.
However, despite the revenue news, profit margins have tripled, he said, largely due to increased efficiency and decreasing food costs.
Food costs were 51 percent for 2007, and now account for 46 percent of Lodge expenses, he said. An effort to keep bar costs down has been successful, he said, so has an effort to keep wages more in line with profit margins.
"It hasn't been a pleasant process to try to get wages stable with the percentage of revenue, but employees are working with management and understand that is what we need to do," Tuoriniemi said.
Facility rental and banquets have accounted for a significant amount of revenue since the lodge's expansion last summer, Tuoriniemi said, however, that has had an unforeseen impact on dining room revenue.
"Every time we had a banquet or event, our dining room revenue went down," Tuoriniemi said.
Suspecting the problem was a lack of parking, he put his suspicions to the test, watching one Saturday night as potential diners came up the driveway only to turn around and go elsewhere for dinner.
"It was a revolving door, because we had a wedding or a party, there were no other parking spaces for regular diners," he said.
Adding parking behind the current motel would provide 25 additional spaces, he said, while elimination of the tennis court would add another 40 spaces.
Another big concern for the board, he said, was utility costs.
"They were up nearly 20 percent this year," Tuoriniemi said. "That's real money."
Utility costs are hovering between $50,000 and $70,000 a year.
The board is looking into alternate sources of heat, such as wood pellet stoves in the dining room or exterior wood-burning structures.
In the meantime, the board recommended closing the lodge to daily traffic from Jan. 3 to its usual annual opening the Friday before Mother's Day in May 2009.
The closure keeps the lodge in compliance with loan requirements of the U.S. Department of Agriculture Rural Development program, he said.
"They know our recommendations and are in support of this plan," he said.
Commissioners unanimously approved the plan, in addition to the request of a $95,000 loan against the lodge's $220,000 line of credit with Rural Development.
Of that, $40,000 would be used toward additional parking, while $55,000 was estimated for the cost of winter trail grooming equipment and snow removal.
With Tuoriniemi choosing not to run again for the Keweenaw County Road Commission when his term expires in December, he was thanked for his efforts on behalf of the county.
"He deserves a lot of credit for what he has done for the Mountain Lodge," said Kim Stoker, director of the Western Upper Peninsula Planning & Development Region, a funding agent working with lodge management.
Tuoriniemi, in turn, recognized the efforts of the county parks and recreation committee for putting in "countless hours" toward trail development and having the lodge's best interests at heart.
"They are diligent and intelligent people who are a pleasure to work with," he said. "I urge the board to let them do their job."
In closing, Tuoriniemi said while lodge management planned to hire an individual to market the lodge, he felt it was everyone's job to keep the facility in mind.
"It's everyone's job to sell, sell, sell the Mountain Lodge," he said. "Whether it's dinner or a banquet or a place to stay or a conference, we need to get that word out to both locals and people from out of town."
Jane Nordberg can be reached at jnordberg@mininggazette.com
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DoubleL
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09-22-08 12:11 PM
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Thanks to everyone for the insight, I am however confused about the comment by bogey 11 that the lodge isnt interested in competing, if they are not competing for meals, drinks, and lodging then what exactly are they doing. Aside from conferences they do have another stream of business that is in direct competition with the rest of the businesses in the Harbor.
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MikeLaMotte
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09-21-08 11:09 PM
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Why should the Lodge take a $55,000 loan for winter trail grooming when they're going to close on the third of January? Yeah, I know it says snow removal as well, but how much could that really cost from when we get our first snow until January? I found bogey11's comment about how the Lodge isn't subsidized by Keweenaw County taxpayers very interesting. Where does the money come from, then? I'm genuinely curious. And what happens to the county if the Lodge can't repay it's loans? They're going to have to get that food cost lower than 46% before they can hope to get in the black.
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jimn18
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09-21-08 9:39 PM
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KML is a rare gem that I feel is under appreciated by the locals. As a relatively new person to the area (having been here only 12 years), I am still amazed at the history and the quality of KML. It is becoming an ideal place for conferences and meetings that will lead to economic benefits for the entire peninsula from Baraga County north. To the board - keep up the good work - be patient - it takes awhile to draw in conferences and meetings, but it will happen.
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bogey11
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09-20-08 2:46 PM
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No general fund dollars are used to assist the Lodge. The taxpayers of Keweenaw County do not subsidize the Lodge. All profit/loss is kept in a separate account. Years ago, money from this account was actually given over to the general fund. Also, if you poll the businesses in Copper Harbor, they are overwhelmingly in favor of the place. If the lodge were interested in competing (and it shouldn't be), it could lower its cabin prices. Grant dollars are tax dollars, however. Whether grant programs should exist is a valid question.
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dontgripegetinvolved
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09-20-08 12:43 PM
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- Private ownership = paying property taxes = no way to make a profit = closure. Not an option - Guests and conference attendees do shop, eat, and sleep in Copper Harbor. This is a new group of customers, they are not stealing current customers from other businesses. - large groups cannot all be accommodated at the KML; thus new room, restaurant and shop business for Copper Harbor. - KML conferences offer the opportunity to bring new guests to the area who otherwise would not have come here. - Copper Harbor is not suffering from KML, they are benefitting. Any loss of business is from lack of upgrading their own facilities to offer what visitors want.
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DoubleL
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09-20-08 12:08 PM
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Could someone with knowledge of the Moutain Lodge please list a few reasons WHY the County should continue to maintain and run the facility at a loss. I understand the jobs standpoint but would a private owner not provide the same benefit. There are many businesses in the Harbor that are privately owned, provide year round employment, and are not utilizing ANY tax dollars.
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jimbob
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09-20-08 10:46 AM
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Oops, change grand to grant
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jimbob
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09-20-08 10:45 AM
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I agree ... Sell, Sell, Sell. No government should be in competition with private business. Sell it to the highest bidder and quit taking money off the grant tree. I hope McCain wins the presidency and shuts off grand money to this type of public fleecing.
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