Florida State Park feeding frenzy

[bucky]

I am currently playing the game for spots next winter and doing pretty well at it but a question came to mind.
How much money does FL make on the money our credit card payments that they get to hold for 11 months? The amount of interest has to be staggering.

[RAS43]

drsteve wrote:

User fees are never enough to pay all the expenses of a state park. The taxpayers pickup the majority of the expenses/costs.

Not in Michigan. The state doesn't spend a penny of general fund money on the parks, in spite of the fact that the parks generate plenty of economic activity that benefits everyone. That's why so much needed maintenance on facilities goes undone, nevermind updates and improvements.

X2 in Colorado!

[drsteve]

User fees are never enough to pay all the expenses of a state park. The taxpayers pickup the majority of the expenses/costs.

Not in Michigan. The state doesn't spend a penny of general fund money on the parks, in spite of the fact that the parks generate plenty of economic activity that benefits everyone. That's why so much needed maintenance on facilities goes undone, nevermind updates and improvements.

[westernrvparkow]

bucky wrote:
Some of you are missing my point. I don't mind them having my money up front. I'm just saying that the collective amount from ALL of us is a huge number.
I pay my bills every month, so all my cards are zero interest.
As to how a business runs I'm pretty well versed.
Thanks for sharing your input, that's what makes America great. We can agree to disagree. I'm done.

It probably is a huge amount of money, and the fees are therefore equally huge. Your zero interest credit card still costs the merchant (in this case the state) two or three percent when they process that deposit. Doesn't matter if you pay it off that month or default and never pay the bill.
When they charge you a $50.00 Deposit, they get around $48.50 put into their account. If they took in 200,000 deposits, their account would have $9,700,000 in it, but they still owe $10,000,000 that they have to apply to those reservations when the people check in. That means they have to earn $300,000 just to break even, and that doesn't include all the costs of taking and accounting for those deposits. By law, states cannot invest in things like the stock market, can't speculate by buying investment property, and can't loan out money to individuals like a loan shark at usury rates.
I just checked Florida municipal bond rates, and they are yielding around 2.75 percent. That means that Florida can borrow money for less than the cost of credit card fees. And it sure is a lot easier for Florida to issue one bond for $10,000,000 than it is for them to collect and administer 200,000 campsite deposits.
Sorry, you can believe what you wish, but the numbers will clearly show that deposits on campsites will not solve the financial crises that most states face.

[bucky]

Some of you are missing my point. I don't mind them having my money up front. I'm just saying that the collective amount from ALL of us is a huge number.
I pay my bills every month, so all my cards are zero interest.
As to how a business runs I'm pretty well versed.
Thanks for sharing your input, that's what makes America great. We can agree to disagree. I'm done.

[Allworth]

Keep Florida green! Send Yankee money.

[westernrvparkow]

Matt_Colie wrote:
I have read though this thread and while we rarely use crampgrounds, if you understand how businesses work, you will appreciate all the more what the "paid in advance" does for the typically cash strapped parks system in any state or any private crampground for that matter.

Things always need something. If you don't have it or can't grow it, you need to buy it.....
If you need to buy it, you need money. If you don't have money, you have to borrow money and that costs money.

So, when you pay a reservation fee, that money does not sit in a drawer waiting. It will be used to defray the costs of acquiring needed materials and services without incurring additional cost.

In short, paying a reservation in advance actually saves us all money on the site rental side. My only problem is that our travel these days is so irregular that predicting where we will be is just not possible.

Matt

At my parks, deposits do pretty much sit in a drawer. That money is not mine, it is not yet "earned". For every dollar of deposit money, I have an offsetting liability, that reservation that has basically pre-paid the deposit amount. I do not actually earn that deposit money until the site is used and the deposit is applied to the guest's stay. Using deposits to create cash flow is just robbing Peter to pay Paul.
Like I have said previously, if there was a way to not take deposits and still insure that all the reservations would be honored by the person making them, I would be money ahead. I wouldn't have to have an expensive online reservation system that has to pass the credit card processor's muster every year. I wouldn't have to have the extensive accounting to keep up with each deposit. I wouldn't have to pay three percent plus a transaction fee on the deposit and wouldn't have to pay another three percent and another transaction fee if someone cancels and I have to refund their deposit. If you can guarantee me the return of my deposit money when the guests arrive I will gladly loan you those deposit monies at the cost of the fees I incurred. I doubt, however that you will be making any great profit paying me nearly three and one half percent for six months use of the money. That equates to a 7 percent annual rate of return, and if you have insight as to where people can earn that rate of return safely you should be running your own brokerage or hedge fund.

[JaxDad]

Since a lot of these 'Government' sites are booked through ReserveAmerica, a 'for profit' corporation based in Dallas TX the 'lower rate' would be eaten up by the cut of the action the private company takes off the top for taking the reservation in the first place.

But over and above that, doing the math doesn't reveal much in the way of staggering amounts of money.

The State of Florida has about 2,800 camp sites in their network, including all the 'primitive' (read 'nearly free') sites. I doubt they'd average out to $20 / night.

2,800 x $20 = $56,000 / night for maybe 6 months of a year, if they had 100% occupancy.

$56k x 180 nights = $10,080,000 / year.

If they could net out at 1% interest on their money, they'd make $100,800 / year.

If they had 3 bean-counting employees administering it, they'd lose money. That sounds Government-like.........

[2cknights]

I sure wouldn't spoil my anticipation of a great vacation by worrying about a little interest out of my pocket. If it bothers you that much, find a 0% interest card.

[tegu69]

In understanding how businesses work, I think you are comparing apples and oranges here. I don't know how it is in Michigan, but State parks in Florida are not run like private campgrounds. They do generate money into the economy in other ways, but making enough to sustain the park and pay salaries through campground and entry fees could be vary year to year. Volunteers help defray costs, but I still don't think that would do it.
If any business is running off of fees paid in advance and you use up that money, what happens the next year when things are not that good.

[Matt_Colie]

I have read though this thread and while we rarely use crampgrounds, if you understand how businesses work, you will appreciate all the more what the "paid in advance" does for the typically cash strapped parks system in any state or any private crampground for that matter.

Things always need something. If you don't have it or can't grow it, you need to buy it.....
If you need to buy it, you need money. If you don't have money, you have to borrow money and that costs money.

So, when you pay a reservation fee, that money does not sit in a drawer waiting. It will be used to defray the costs of acquiring needed materials and services without incurring additional cost.

In short, paying a reservation in advance actually saves us all money on the site rental side. My only problem is that our travel these days is so irregular that predicting where we will be is just not possible.

Matt

[bucky]

Park, every Gov entity I did business with the last 15 years at least used credit cards in the transaction. Every employee had a card and did every transaction with it. I don't think you have a grasp on just how many cards that is.Every county, every state, every US gov person.
Of course fraud is an issue with some, but usually caught quickly.
Don't forget that they are tax exempt as well and can just pass a law limiting their other exposures.

[tegu69]

I don't understand the one or two transactions, they do thousands, I would say. Many State parks, many reservations. On the other hand,I could agree that the transactions cost money, but, when the money is put into the state's general revenue fund, that money is making money in other ways.

[westernrvparkow]

bucky wrote:
I'm not fussing, just stating that that is a huge amount of money upfront that could be invested and should be. After the first year it's all gravy. We used to invest money from the business over the weekend and made bank on it. I'm sure their Comptroller knows how to maximize assets.
I'm also pretty sure that credit card fees are drastically reduced for state and local governments. As is electricity etc.
All of that being said if it had been up to me when we retired I'd have been your neighbor in FL, but you can't separate a Mama from her cubs.

Why would a government entity get a lower rate on credit card fees? The are not a high volume user. No government agency runs more credit card transactions than Walmart, or Amazon, or probably even the local convenience store. You MAY have one or two transactions with the state via credit card each year, you probably use your card 100 times at the local grocery store in that same period.
As for "After the first year it's all gravy", I am not sure what you mean. Since reservations are only allowed up to 11 months in advance, the deposit money would be applied to each stay before that year passes. Any money in deposit at that time would be new deposits for the next 11 months, deposits on which a new processing fee was paid. You never get ahead. Like I said before, deposits cost money, they do not generate income. They are necessary only because without them people would abuse the system. They are a cost of doing business, period. They never were and never will be a profit center.

[tegu69]

I'm pretty sure that the funds go directly to the general fund. So, the interest or whatever, gets spread out. Departments of the state (Fl) are budgeted fiscally. btw Nice little town there. Have friends nearby.