Revenue study clouds plans for bus station move
Local transit officials have been advocating, and even doing some preparatory planning, for a project that would combine the local drop-off point for Greyhound with the current Grand Valley Transit hub in south downtown Grand Junction.
But the preliminary business analysis put together on the project, compiled with numbers provided by Greyhound, is fairly uninspiring and could jeopardize the future of the project.
“I think the data that was presented was a surprise to everyone. It did not appear to provide the returns to GVT, either through ticket sales or through a vendor service, that most folks had anticipated,” Mesa County Commissioner Steve Acquafresca said during a meeting this week. He is the vice chairman of the Grand Valley Regional Transportation Committee, a group that oversees the operation of GVT and is considering the joint Greyhound-GVT proposal.
It works like this: Greyhound would leave its current station at 230 S. Fifth St, which it has leased since the 1940s, and join the GVT Operations Center a few blocks away at 525 S. Sixth Street, a facility built in 2009 at a cost of $4 million.
GVT likes the idea because it would be responsible for selling Greyhound tickets and receive a potential commission on each ticket sold. It also envisions selling food or vending services to those additional passengers.
Greyhound hopes ticket sales would increase with a combination facility while its cost of business would drop.
Transit officials got their first hard look at the numbers last week, though, and as Acquafresca said, they were perhaps less than expected.
According to the analysis, Greyhound currently sees more than 81,000 passengers blow through town, which equates to more than $918,000 in ticket revenue each year.
One-third of those passengers buy food or vending items, yielding more than $100,000 in sales revenue for Greyhound. But the company’s net proceeds on that revenue is a little more than $5,000.
The Grand Junction station on the whole is a fairly low-expense business for Greyhound. The bus company spends just $106,000 on expenses per year, mostly in rent.
“One of the things that we took out of this is, Greyhound does not have a big motivation for change,” said Chris Reddin, whose consultant group developed the business analysis.
The real question for the GVRTC is what it can expect in terms of extra revenue, based on Greyhound’s position. In other words, is a building expansion and renovation, hiring additional staff and assuming some of the issues with adding Greyhound traffic worth the effort?
The maximum commission on ticket sales being talked about is 20 percent, or more than $183,000 per year. But that doesn’t consider GVT’s costs.
In short, the GVT facility would have to be operated 24 hours a day, five more hours than it is today. Assuming the additional costs of two staff people working eight-hour shifts and a security guard for a minimum of 12 hours, the net profit amount from ticket revenue drops to a little more than $89,000 a year. Having 24-hour security decreases the net profit amount to a little less than $49,000 a year.
There is the extra element of food service revenue. The analysis estimated vending machines alone would bring in about $21,000 in profit to GVT. A plan that would include a simple food stand could bring a profit of about $13,000 per year, analysts determined. Those estimates, however, are well below some of the numbers originally discussed for the project.
“There is some return possible, but it’s hardly significant. I would almost call it negligible, for the amount of investment that GVT would be required to retrofit the building for this kind of a purpose,” Acquafresca said.
Reddin said the main objective of the analysis was to find out the answer to the question, “Does this thing fly?”
“The answer is, it flies. It’s not soaring high above the ground,” she said. “There is some revenue potential, but the projections are not hugely rosy.”
But for an organization that relies so heavily on grant funding, the extra revenue stream — even if it turns out to be more like a trickle — will go a long way in securing future funding, said Todd Hollenbeck, manager of the Mesa County Regional Transportation Planning Office.
“If we generate $100,000 in revenue, that goes out in matches as another $400,000 in grant money. So that’s pretty good,” Hollenbeck said.
Analysis of the partnership will continue, and if GVRTC signs off on a business plan, the group could apply for state grant funds for the necessary renovations. Decisions on those grant requests could come as early as next spring.