Park Service chooses Xanterra for 20-year Yellowstone concessions contract

Xanterra Parks & Resorts has been chosen for a 20-year contract to operate hotels and offer other services in Yellowstone National Park, including the Old Faithful Inn. (Janet White/Yellowstone Gate - click to enlarge)

Xanterra Parks & Resorts has been chosen for a 20-year contract to operate hotels and offer other services in Yellowstone National Park, including the Old Faithful Inn. (Janet White/Geyser Watch – click to enlarge)

By Ruffin Prevost

CODY, WYO. — In a decision that could cover as much as $2 billion in visitor spending over the next two decades, the National Park Service has chosen incumbent concessioner Xanterra Parks & Resorts to provide lodging, dining, retail and other visitor services in Yellowstone National Park.

The Park Service announced the contract Tuesday in a written statement, but park spokesman Al Nash said he was not authorized to release additional details such as which other companies had submitted bids.

The contract gives Xanterra exclusive rights to operate publicly owned park properties such as hotels and restaurants as well as some retail shops, and to offer other visitor recreation services like boat tours and horseback rides.

Jim McCaleb, vice president and general manager for Xanterra, said the company was “pleased and proud to be selected.”

“It’s certainly a big deal to those of us who have lived and worked here in Yellowstone for as long as we have,” said McCaleb, who started working in Yellowstone in the late 1970s.

“This is a signature operation for us. We’ve been here a long time, and we’re committed to the local region,” he said. “There will be numerous challenges, but we’re excited about the opportunity.”

The company has been operating as the primary Yellowstone concessioner since December 2005 under a contract that expires in November. The new 20-year contract was posted last year for competitive bids, and calls for a 4.5-percent franchise fee and a 6-percent repair and maintenance reserve account, according to the park’s public affairs office. Xanterra’s current contract includes an 11.5-percent repair and maintenance reserve account and a 2.5-percent franchise fee.

Privately held Xanterra is the nation’s largest national and state park concessioner. The company will continue to operate such iconic properties as the Old Faithful Inn and the historic Lake Hotel, Yellowstone’s oldest existing hotel.

Xanterra reported gross receipts of approximately $89 million for calendar year 2011, according to Park Service records. Accounting for inflation and potential fee increases over the life of the 20-year contract, the company could conceivably gross an approximate total of $2 billion or more.

The contract calls for Xanterra to spend an estimated $134 million in facilities improvements over 20 years, with roughly half of that amount being spent on redevelopment of lodging at Canyon.

Cabins at Canyon were constructed as temporary facilities in the 1960s and are “long overdue” for upgrades, McCaleb said.

Other projects required under the contract include renovation of the Fishing Bridge RV park, and continued renovation of Lake Hotel. Additional work will include construction of new concession employee housing at Lake and Old Faithful, rehabilitation of the Mammoth Haynes Photo Shop, and changes necessary to provide year-round lodging at the Mammoth Hot Springs Hotel.

Work on these facility improvement projects is scheduled to begin next year, and is to be completed by 2018.

McCaleb said concessioners like Xanterra do not submit bids based on specific pricing parameters or revenue models, but instead write a proposal that seeks to demonstrate qualifications and responsiveness to meeting Park Service priorities for how the contract should be fulfilled.

Bids are evaluated partially based on a company’s ability to meet Park Service goals for sustainable operations and strong environmental stewardship.

McCaleb said he did not have details of how Xanterra’s bid scored in in those areas, but that the company has a long history of environmental responsibility.

“We’ve made a commitment, for instance, to health and sustainable food offerings,” he said. “As trends in food and beverage continue to point toward healthier and more sustainable options, we look forward to being a part of that whole movement.”

Xanterra announced earlier this month that it is purchasing three cruise ships from Seabourn, a Seattle cruise company. The ships will join the Windstar Cruise ship fleet, which Xanterra acquired in 2011. Xanterra also recently announced its purchase of the Grand Hotel in Tusayan, Ariz., a 15-year-old, 121-room hotel at the south rim of Grand Canyon National Park.

Contact Ruffin Prevost at 307-213-9818 or [email protected].

One thought on “Park Service chooses Xanterra for 20-year Yellowstone concessions contract

  1. Two things raise my eyebrow…. the 20 year term , which is surprisingly long in traversing several Presidential administrations and Park Service management changes , and the 5.5. percent reduction in proceeds put towards the maintenance and repair fund. Hmmm…. those old buildings and structures seem like they would need more, not less, in their Fixit Fund. Increasing the ” royalty ” fee all the way up to 4.5 percent seem to top out low to me. After all, Xanterra has a monopoly and a captive market. The Taxpayer should get more in exchange for providing this wonderful business opportunity.

    I have to ask if there is any way to learn what other entities were in the bidding for this cherry contract. Seems like Xanterra got a sweetheart of a deal.