Lucrative Grand Canyon contract up for bid again

August 19, 2014 - 9:35 PM
Grand Canyon Contract

FILE - This Monday, Sept. 27, 2010, file photo, shows hikers on the South Kaibab Trail in Grand Canyon National Park, Ariz. One of the most lucrative contracts in the National Park Service is going out to bid for a third time, after Grand Canyon found the previous bids unacceptable. The successful bidder will provide lodging, food, retail and transportation services as well as mule rides on the South Rim. Those services are expected to bring in nearly $1 billion in gross revenue over 15 years. (AP Photo/Carson Walker, File)

FLAGSTAFF, Ariz. (AP) — A lucrative contract to operate some of the most iconic lodging and food locations at the Grand Canyon has been reopened for bidding in a process that will bring changes affecting the millions of people who visit the landmark each year.

The contract first went out for bid a year ago. But Grand Canyon Superintendent Dave Uberuaga said the park didn't receive any bids adhering to the conditions called for in the 15-year pact.

The new contract requires that the winning bidder operate food trucks on the South Rim and expand patio dining at the historic El Tovar lodge to accommodate crowds during the busy summer months.

It also calls on the winning bidder to demolish six outdated Maswik South lodge units and replace them with 90 standard rooms and 30 rooms with kitchenettes by 2017. In addition, rooms at the rustic Bright Angel lodge must be upgraded.

Other requirements include eliminating on-site laundry services to conserve water, and instituting a lottery system for the cabins and dorms at Phantom Ranch that sits at the bottom of the canyon and can be reached only by mule, foot or rafting the Colorado River.

Bids are due in October, with the contract to be awarded in January, potentially bringing in nearly $1 billion in gross revenue over the next 15 years for the winning vendor.

Under previous bidding, possible concessionaries balked at provisions asking them to pay more than $150 million upfront to current contract holder Xanterra Parks & Resorts for improvements made to the facilities over the years, Uberuaga said.

Grand Canyon cut that cost to $57 million by borrowing money within the National Park Service that it will repay with an increase in the franchise fee for the contract, set at a minimum 14 percent. Xanterra Parks & Resorts currently pays a 3.8 percent fee on gross revenue to the park.

Uberuaga said he's hopeful the changes will entice bids.

"It's Grand Canyon, and so a lot of concessionaries would like to have Grand Canyon in their portfolio," he said.

Xanterra — the country's largest park concessions management company — didn't immediately respond Tuesday to a question on whether it would bid on the contract.

David Nimkin, Southwest regional director for the National Parks Conservation Association, credited the Park Service for coming up with a way to make the contract more attractive. But he questioned whether borrowing internally would hurt the ability of Grand Canyon and other parks to serve visitors.

"The liability that the Park Service has assumed with the Xanterra contract is huge, and it's like an albatross for one important factor in the Park Service's mandate, which is visitor experience," he said. "That doesn't mean Xanterra doesn't do a good job."

The Park Service also is asking prospective bidders to submit creative ideas, separately from the contract, for an 11,000 square-foot warehouse that has been eyed for an art and river heritage museum.

Delaware North Companies Parks & Resorts recently was awarded another 15-year contract that includes some services previously provided by Xanterra. That contract begins in January for food and retail services at Grand Canyon Village, Yavapai Lodge and Desert View, a public laundry facility, showers and campground. It is worth about $30 million a year.