Dear Shareholders of Seldovia Native Association, Inc.,
The year ending December 31, 2011 proved to be challenging for Seldovia Native Association, Inc. as the audited Financial Statements in this Annual Report show. The company posted a loss of $(75,013) on a consolidated basis largely due to less than planned contract revenue in our government contracting operations at Red Mountain, LLC. Early in 2011, we remained optimistic that the same level of government contracts would be available as had occurred in 2010, however, as the year progressed it was apparent that the ongoing fiscal crisis and resulting federal budget deficit would negatively impact our defense contracting business in construction on military bases where we operate in Central California. Without question this reduction in defense spending has led us to reassess the continued operation of Red Mountain, LLC in the defense contracting arena. Strategically Red Mountain, LLC is now bidding on non-defense related construction opportunities while at the same time finishing up those projects that we have been successfully awarded since the end of the 2011 fiscal year.
While our government services operations have declined that reduction was somewhat offset by the successful year that the Dimond Center Hotel experienced in 2011. After two years of stagnant growth, the hospitality industry began to rebound last year when hotel bookings increased as renewed marketing efforts focused on Alaskan travelers brought increased business. The hotel enjoyed higher occupancy even in the slower off season period largely due to targeting different customer sectors such as sports teams, government travelers and Alaska Native Corporate customers. Bookings for the 2012 season have been robust and we anticpate that we will have another profitable year for the hotel. A new feature added to the Hotel this past year has been the remodeling of the Camel Rock Lounge which now offers regular dinner service in addition to the complimentary breakfast service we have always offered. 2012 will mark the ten year anniversary since the hotel opened for business. This is a milestone in Seldovia Native Association, Inc.’s corporate history as the hotel has become a core operation for the company.
As we reported to you last year, the process of winding down the Main Street Market and Bayview Suites operation in Seldovia has been completed. This past year we concluded the sale of much of the related equipment and furnishings from that operation. The remaining structure which is energy inefficient and aging is scheduled to be demolished in the near term. The prime waterfront site that the Market occupied will be cleared and held by the company as we continue to further assess the highest and best use for this real estate.
Seldovia Native Association, Inc. is fortunate to hold some of the most desirable lands in Southcentral Alaska both in terms of its natural beauty and potential development opportunities. We continue to put our efforts into resolving the issue of land not yet conveyed to the company such as the ongoing 12(a) and 12(b) matter which has been complicated by legal filings that now have resulted in an arbitration process in attempts to resolve the issue. In addition, there are increased public and governmental pressures on the Company to commit resources to address issues such as trespass, overlapping regulation, and community interests that affect these holdings. Your Board of Directors and management are committed to providing accountable stewardship of your lands which are core to the values and customs of us as an Alaska Native people.
As we look forward the challenge for us is to strategically focus on refining the business operations we are currently engaged in as well as defining a path of growth that minimizes our risk in a still fragile economy. This will not be an easy undertaking and will require the careful policy guidance of our Board of Directors working with management. Above all, the commitment to building value for our shareholders will ultimately guide the direction of Seldovia Native Association, Inc.’s path to the future. Ongoing communication with you our shareholders continues to be a key, critical component of any growth we pursue so that collectively we all strive to work for a stronger, vibrant and productive Seldovia Native Association, Inc.
Leo Barlow, Chief Executive Officer