DonKDon Kashevaroff | April 2018 Chief Executive Officer Report

2017 proved a challenging year for SNA. Our two main business lines had dramatically different results. Back in 2002, we opened the Dimond Center Hotel and began our first venture into the tourism business. Over the next 14 years we grew the profits until having our best year in 2016. Unfortunately, the downturn in the Alaska economy prevented 2017 from beating the previous year, but 2017 is still one of our top three profitable years.  Even with more hotels coming into the market, the Dimond Center Hotel is holding its own and outperforming many similar hotels. Uniquely designed and situated between Walmart and the Dimond Center Mall, our hotel has become the hotel destination for rural Alaska. We do not foresee this changing in 2018.

A few years after opening the hotel, SNA dipped its toes into the “8(a)” government contracting realm. By starting small and keeping costs low, SNA was able to slowly expand the 8(a) operations via our contracting subsidiary, “Red Mountain, LLC”. Since the 8(a) status expires after eight years, in 2015 and 2016, SNA added three more subsidiaries which became 8(a) certified: Red Mountain Solutions LLC, Red Mountain Contractors LLC and Red Mountain Environmental LLC.  While 2017 saw a recession in the Alaska market for our hotel, 2017 also saw a pullback in government contracting across the country. Our three new 8(a) subsidiaries did not win any contracts in 2017. Our original subsidiary, Red Mountain LLC, did have projects underway from 2016, and won one new contract in 2017. While that last 2017 project was successful, the project that was started in 2016 encountered many difficulties and losses.  These were compounded with staff and management turnover. And with the cost of running three additional subsidiaries with no contract wins, the total cost of our 8(a) division almost eclipsed the great year of our hotel division.

 

Don Kashevaroff

President / Interim CEO