Fort Worden PDA Finance & Audit Committee June 24, 2020 - PowerPoint PPT Presentation

Fort Worden PDA Finance & Audit Committee June 24, 2020 Reopening Budget Scenarios & Cash Flow Considerations

Considerations • Scenario 1: Limited Reopen of Hospitality Services August 2020 • Scenario 2: Do not reopen until April 2021. Fort managed with very limited staffing. • Scenario 3: Dissolution

Fort Worden Financial History and 2020 Budget

Scenario 1 and 2 Overview: Net Revenues $100 $100 $(100) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 $(100) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 $(300) $(300) $(500) $(500) $(700) $(700) $(900) $(900) $(1,100) $(1,100) $(1,300) $(1,300) $(1,500) Cumulative Net Revenue Quarterly Net Revenue $(1,500) Scenario 1 Scenario 2 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Cumulative Net Revenue $ (596) $ (836) $ (712) $ (693) $ (886) Cumulative Net Revenue $ (596) $ (836) $ (1,039) $ (1,248) $ (1,502) Quarterly Net Revenue -596 -240 124 19 -193 Quarterly Net Revenue $ (596) $ (240) $ (203) $ (209) $ (254)

Overview: Cumulative Cash Position 300,000 200,000 100,000 - July Aug Sept Oct Nov Dec Jan Feb Mar (100,000) Ending (200,000) (300,000) (400,000) (500,000) (600,000) Reopen August 2020 Reopen April 2021 (700,000)

Scenario 1: Fort Worden Services Open August 2020 General Assumptions • Phase 3 reopening for Jefferson County likely to occur in early July • Fort Worden Campgrounds are now Open • Recovery Plan and FEMA funds provide some financial support for PPE expenses required to reopen • Makers Square construction stays on schedule • LCP grant reimbursements is expected in late July; providing some potential cash flow for reopening

Scenario 1--Opens August 2020: Advantages & Risks Advantages • Opening Taps and Canteen restaurants will be a value-add for community members and people staying overnight at Fort Worden. • Brings back some staff for the limited reopen period. • Builds community support and public confidence that PDA will survive crisis. • Enables the PDA’s to provide more service support to partner businesses (minimally, F&B, security, maintenance) • Strong accommodation revenues forecasted for August through Nov (net $321,500)

Scenario 1 Opens August 2020: Advantages & Risks Risks • A COVID case at the Fort could shut down affected/contaminated unit(s) for 3 weeks. • A COVID surge could result in additional cancelled reservations. • Costs to operate under COVID may be greater than anticipated • Potential for emergency or compliance repair is a risk given recent history and may affect financial sustainability for a limited reopening. (e.g., HVAC, Fire Alarms, electrical outages) • There is the potential that maintenance and repair costs can potentially be double of what is budgeted.

Scenario 1 Opens August 2020: Advantages & Risks Risks • Inability to accommodate groups that are 50 persons or more will result in additional cancellations for larger group business. • Accommodating groups that include 50 (unrelated) persons or less may pose risk of a COVID spread at the fort. • Adhering to the Governor’s group gatherings restriction is estimated to be a service and cost challenge as well as safety challenge (i.e., managing social distances and masks protocols inside buildings) • Opening Taps could yield low revenue margins.

Scenario 1: Lodging Accommodations Projection Assumptions 2020 Projections Q3: Current Business on the Books (BOB) revenue for Aug & Sept is 16% of average revenues ($745,313) for past 3 years. • Average occupancy on BOB is estimated at 18%. Last 3 years average has been 65%. • Projected revenue is 6% more than BOB with a projected occupancy increase of 5%. Q4: Current BOB revenue is 29.6% of average revenues ($543,000) for past 3 years. Average occupancy on BOB is estimated at 10%. Last 3 years average has • been 35%. • Projected occupancy is doubled from 10 to 20% and total revenues as well.

Scenario 1: Lodging Accommodations Projection Assumptions 2021 Projections Q1: Current BOB revenue is .04% of average revenues from past 3 years. • Average occupancy on BOB is estimated at less than 1%. Last 3 years average has been 30%. • Projected occupancy is increased to 12% and revenues to 40%.

Scenario 1: Fort Worden Services Open Aug 2020 Lodging/Accommodations July 2020 –March 2021 Assumptions • There is potential for increased leisure travelers due to pent-up demand from I-5 corridor. • 60% of reservations’ weekly communications have been closed since February • Fort Worden’s lodging facilities, location and open space for outdoor activities makes it a very desirable spot to come and stay. • The Cottage Collection, NCO Row, Officers Row, Bricks and the Lofts will be reserved at no more than 50%. Dorms will be off line. Approximately 40% of bookings for these units have been leisure. • The ADR is over $500 for Aug with a current 20% occupancy for all units represents strong sales opportunities.

Scenario 1: Fort Worden Services Open Aug 2020 Lodging/Accommodations July – December 2020 Assumptions Overall operating costs are planned to be lower than if the Commons and Front Desk were open and despite increased cleaning requirements. Examples of a few are: • Leisure travelers will check in on the porch of the Sales office in house 15. • Cleaning a unit will wait one day before housekeeping enters, providing a wait period that reduces extra-ordinary efforts for cleaning. We plan to purchase ultra- violet ray cleaning equipment that will reduce the labor time and provide better sanitization. • Dishes and other kitchenware will be reduced to a minimum. At check-out all kitchen wares will be removed and sterilized through our commercial dishwashers. The dishwasher labor cost is included in the restaurant budget.

Reservations on the Books Leisure Month Group Standard Leisure NR Third Party Total Leisure Total Aug $3,730 $106,856 $124,306 $923 $232,085 $235,815 Sept $21,236 $32,347 $87,327 $112 $119,786 $141,022 Oct $12,172 $7,773 $32,167 $408 $90,348 $102,520 Nov $27,218 $7,222 $19,034 $0 $46,256 $73,474 Dec $17,840 $7,101 $6,325 $0 $28,426 $46,266 2020 $82,196 $161,299 $269,159 $1,443 $516,901 $599,097 Jan $2,998 $1,749 $5,848 $0 $7,597 $10,595 Feb $99,786 $0 $0 $0 $0 $99,786 Mar $9,000 $598 $6,408 $0 $7,006 $16,006 Q1 2021 $111,784 $2,347 $12,256 $0 $14,603 $126,387

Scenario 1: Occupancy Rates 2017 2019 2018 PRODUCT OCC % PRODUCT OCC % PRODUCT OCC % TYPE: Leisure TYPE: Leisure TYPE: Leisure COTTAGE 52.51 COTTAGE 41.67 COTTAGE 54.49 OROW 34.53 OROW 30.64 OROW 34.36 NCO 57.09 * NCO 48.51 NCO 56.19 Jan-April 2019 NCO was offline Annual Revenue and Rates for Product Types 2017 2018 2019 ADR OCC % REV ADR OCC % REV ADR OCC % REV 44.35% $2,997,541 Total $385 41.10% $ 2,627,240 $219.45 46.75% $ 2,816,363 $405

Scenario 1: Lodging Reservations Overview Business On Books 2020 ADR OCC % REV $232,085 August $ 525 20% $119,786 September $ 556 15% $90,348 October $ 495 10% $46,256 November $ 428 5% December $ 322 3% $28,426 Total $516,901 2021 Business On $ 7,597 Jan 584.38 0.49% Actual Quarterly Revenues the Books Feb $ 7,006 March 333.45 1% 2017 2018 2019 2020 BOB Projection $14,603 Q3 $ 1,172,101 $ 1,203,742 $ 1,326,706 $ 351,871 $ 430,050 Q4 $ 494,172 $ 543,693 $ 558,024 $ 165,030 $ 330,060 $ 1,666,272 $ 1,747,435 $ 1,884,731 $ 516,901 $ 760,110 2017 2018 2019 2021 BOB Projection Q1 $ 294,799 $ 433,794 $ 332,913 $ 14,603 $ 141,534

Scenario 1: Fort Worden Services Open Aug 2020 Lodging/Accommodations 2020 2020 2021 Revenues Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Accommodations 266,387 0 430,050 305,000 1,001,437 141,534 Other Revenue 12,119 0 16,302 14,250 42,671 1,000 Total Revenues 278,506 0 446,352 319,250 1,044,108 142,534 Expenses Personnel Salaries & Wages Pre Covid Staffing 123,211 123,211 Post Covid Skeleton Crew 37,486 28,980 28,980 95,446 28,980 Post Covid Reopening Crew 47,320 67,020 114,340 67,020 Total Personnel 123,211 37,486 76,300 96,000 332,997 96,000 Benefits & Payroll Costs 33,381 17,286 22,434 22,434 95,535 22,434 Repairs & Maintenance 0 0 10,000 12,500 22,500 12,500 Utilities 131,225 57,000 54,000 72,000 314,225 72,000 Contracts 0 0 0 0 - General Operating Expenses 22,600 5,800 19,600 24,000 72,000 20,000 PPE/Sanitization Supplies 0 0 0 0 - Total Expense 310,417 117,572 182,334 226,934 837,257 222,934 Net Revenues -31,911 -117,572 264,018 92,316 206,851 -80,400

Scenario 1: Fort Worden Services Open August 2020 Restaurants July 2020 – December 2020 Assumptions-- TAPS • There will be a limited menu • Open hours will be determined by sales and activity. Budgeted to be open Thurs through Monday. • Outdoor seating only • There will be two main sections each served by a server and one bus person during busy periods. • There will be one bartender working a shift. Kitchen will need one prep and one main chef. • The patio will be reconfigured to have a total of 13 tables and able to seat a total of 42 people .