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Home / News / Government & Politics / State Government
Iowa’s only state-owned resort has struggled financially since it opened in 2008
Feb. 21, 2022 7:00 am
The Iowa Department of Natural Resources wants to sell Honey Creek Resort after a private company said it will be done managing the struggling resort by April 2023.
“The DNR is considering all options for the property, including the feasibility of a sale,” DNR spokeswoman Tammie Krausman said in an email.
“If a sale is possible, that is DNR’s preference at this time.”
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 has offered stand-up paddle boards, kayaks, fishing, a water trampoline, biking and naturalist programs.
Delaware North Companies Parks and Resorts of Buffalo, N.Y., which has been managing the resort since 2016, told the DNR in December it will take an option to get out of the arrangement seven years into a 15-year contract.
“Honey Creek is a beautiful property,” Derek Zwickey, chief operating officer for Delaware North at Honey Creek Resort wrote in a Dec. 29 notice of termination.
“We’ve enjoyed the opportunity to enhance its offerings and build a strong relationship with you and others at the IDNR. As you know, we’ve worked hard together to overcome financial and other challenges.
“Unfortunately, we believe some of those challenges will continue despite our collective efforts.”
A 2021 audit of the resort shows revenue of $3.94 million in 2020, down from $5.88 million in 2019. After expenses, the resort made just $407,000 in 2020, the audit shows.
Finding enough guests to stay at Honey Creek always has been a challenge because the resort is not near any major Iowa cities and doesn’t have a lot of other attractions nearby.
In 2018, the company advertised on billboards in the Des Moines area and hosted cold-weather events, such as Oktoberfest, a Thanksgiving dinner and a father-daughter dance all with the goal of boosting bookings.
But the pandemic derailed any of those efforts and Honey Creek’s rooms were only 30 percent occupied in 2020, compared to 46 percent the year before, the audit shows.
Fewer guests in the lodge translated to lower sales for food and rentals.
Delaware North will continue to operate Honey Creek as usual this summer and still will promote the resort and accept future bookings, Krausman said.
The DNR is soliciting bids for companies to appraise the resort, Krausman said. The appraisal will help the state decide whether to proceed to sale.
Under the state’s contract with Delaware North, the company is required to pay Iowa 7 percent of gross monthly receipts. 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 5 percent will be paid to the state.
The resort has never reached those levels, officials said.
Delaware North was required to invest at least $2.51 million into the resort.
The company reported it has fulfilled that commitment by adding temporary employee housing and a wedding pavilion/gazebo, upgrading conference center audio/visual equipment, remodeling the gift shop and refreshing rooms on the lodge’s main floor.
Some larger projects — including an outdoor pool and spa/salon — were put on hold by mutual decision of the state and Delaware North.
Comments: (319) 339-3157; erin.jordan@thegazette.com
Investigative Reporter, The Gazette
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