Time to Bid Again: Grand Canyon Contract Estimated at $1.5 Billion

A lucrative contract for lodging, food, grocery stores, transportation, and mule rides has been reopened for bidding for a third time at Grand Canyon National Park. The contract first went out a year ago. According to Grand Canyon Superintendent Dave Uberuaga, the park didn’t receive any bids that were responsive to the conditions of the contract.

Uberuaga recently described the existing businesses, future business opportunities, as well as details on how to submit proposals for the contracts.
Bids are due in October, with the contract to be awarded in January. Uberuaga estimates the winning vendor’s combined gross revenue could be almost $100 million per year or $1.5 billion over the life of the 15-year contracts.

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

The winning bidder will also need to demolish six outdated Maswik South lodge units and replace them with standard rooms and rooms with kitchenettes by 2017. In addition, the rustic Bright Angel lodge must be upgraded.

The contract also asks for removing on-site laundry services to conserve water, and starting a lottery system for the dorms and cabins at Phantom Ranch that sits at the bottom of the canyon. The ranch can be reached only by foot, mule, or rafting the Colorado River.

Xanterra South Rim, L.L.C. currently operates concessions under the lodging and hospitality contract. Delaware North Companies at the South Rim, Inc. (DNC) operates stores under the smaller general stores and hospitality contract.

If a company other than Xanterra or Delaware North bids, the company would pay the two companies for renovations and upgrades made to properties at the Canyon. Under previous bidding, possible bidders balked at provisions asking them to pay more than $150 million upfront to current concessionaries.

Since then, 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 currently pays a 3.8 percent fee on gross revenue to the park.
Uberuaga is hopeful this will entice bids by the eight major concessions companies in the U.S.

“It’s Grand Canyon, and so a lot of concessionaries would like to have Grand Canyon in their portfolio,” Uberuaga said.