Grand Canyon Can’t Find Replacement for Xanterra

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The Grand Canyon National Park isn’t just a place. It’s a tourist destination, complete with Grand Canyon lodging, restaurants, and many other amenities tailored specifically for visitors to this monumental destination. Over four million people, including families, thrill-seekers, and those seeking inspiration, visited the resort last year, enjoying not only the natural beauty of the park, but many man-made conveniences as well. Xanterra Parks & Resorts is asking a district judge to keep it that way, and warns that if the National Park Service follows through with a new set of concessionaire contracts, most of the park’s visitor services will be gone at the end of the year.

“If the housing problem is not solved now, visitors to the park in January 2015 may find the many lodges, restaurants and other essential facilities that Xanterra previously ran shuttered,” Xanterra chief Andrew Todd said in a statement.

The Grand Canyon National Park has had trouble in the past few years with their system of allowing different companies to bid for a position. Park officials are having a hard time creating a competitive bidding environment because of the fact that new concessionaires must reimburse the former tenant for their operating costs over the last term of business. In this case, any company hoping to replace Xanterra at the end of the year would have to make an initial investment of over $200 million since Xanterra has served the Grand Canyon since 1905.

The park service may have a solution to the less-than-competitive bidding environment, however, and it comes in the form of the largest buy-down in park history. The agency hopes to simply buy Xanterra out of its 105-year investment by moving money around the park’s various departments.

The agency itself was able to gather approximately $100 million, half of Xantera’s equity, but even that reduction wasn’t enough to bring in more competitive bids, so the agency split the Grand Canyon’s operations into two separate contracts, awarding a small part of the park’s concession business to a smaller company.

This managed to lower Xanterra’s equity by another 20%, but the split also effected staff housing in a way that Xanterra is less than happy with. They claim that the smaller concessionaire was given a disproportional share of housing, leaving Xanterra with insufficient lodging for the 1,015 workers they need to maintain year-round. For the past 15 months, Xanterra has pleaded with the park to change this split, but Xanterra employees are often still kept in small, crowded, and badly insulated rooms.

The park service’s changes have placed the agency in a worse situation than it began and, despite many revisions and deadline extensions, finding a replacement for Xanterra is still proving to be a difficult process. Unable to find bidders, the agency has switched gears and is now looking for bids on a temporary one-year contract that will likely serve as a transitional period while the agency tries to gather more long-term support.

How do you feel this situation could be handled? What companies would you like to see handling the destinations amenities? Share your thoughts with us in the comments section below.