Significant changes are in the offing for lodging operations in parts of Yellowstone National Park, where officials envision tens of millions of dollars of improvements.
The just released National Park Service contract proposal for Yellowstone indicates a number of major changes will take place in the park’s lodging facilities. The contract will run for 20 years and requires an estimated initial investment of nearly $45 million from the selected bidder. Additional outlays of $135 million will be required in a variety of facility improvements.
Xanterra Parks & Resorts, the existing concessionaire, currently operates all nine lodging facilities within the park. Xanterra is operating under a three-year extension that expires in November 2013, when the new contract is to take effect. The park’s other major concessionaire, Delaware North Companies Parks & Resorts, operates 12 general stores that are not part of the newly-issued contract proposal. Delaware North does own three hotels just outside the park’s west entrance in West Yellowstone, Montana.
Major changes are due for a number of the park’s lodging facilities. As an indication of the mammoth size of the park’s concession operation, consider that in 2010 gross revenues of the concessionaire amounted to $86 million, and the Park Service received franchise fees from the concessionaire of more than $2 million. Not surprisingly, the largest outlay by far will be at Canyon, Yellowstone’s biggest lodging complex and the one with the greatest need for upgrading. Other major outlays will be required in Mammoth, Lake, and the Old Faithful area. Another expensive project will deal with the Fishing Bridge RV Park.
The major improvement programs and outlays include:
Mammoth Hotel Area ($6.1 million) - Renovation of the vacant Haynes Photo Shop (south across the parade ground from the hotel) so administrative offices currently in the hotel’s second floor can be moved there. Vacated space in the hotel will be reconfigured into seven additional guest rooms, including one suite, three rooms without private baths, and three rooms with private baths. Construction is to commence in 2015 and is to be completed the next year. In addition, 14 cabins currently used as employee housing will be returned to use as guest cabins, necessitating the concessionaire to acquire employee housing outside the park.
Old Faithful Area ($9.7 million) - Construction of a 77-room employee dormitory so 67 cabins currently used by employees can be returned to visitor use. This project is to commence by 2016 and reach completion by 2018.
Lake Yellowstone Hotel ($16.5 million less $8 million provided by the existing concessionaire) - Retrofitting the hotel for seismic structural stabilization. Expanding deli services (currently a small operation in the east wing) by moving the current hotel administrative services (currently near the lobby in the east wing) to an adjacent boiler building that is to be remodeled and retrofitted for seismic stabilization. This work is to be completed by 2015.
Lake Area ($14 million) - Construction by 2016 of a 60-room employee dormitory as a replacement for the existing dormitory that is to be demolished. The expected cost is $5.4 million. At Lake Lodge Cabins, the proposal calls for rehabilitation of 19 Pioneer cabin buildings, rehabilitation and relocation of 15 additional Pioneer cabin buildings, and relocation of six four-plex Western cabin buildings. The expected cost of Lake Lodge Cabin renovations is $8.6 million.
Canyon Area ($70.5 million) - Construction of five lodges with a total of 407 guest rooms.
These include 60 lower-cost rooms with shared bathrooms, 10 suites, and 337 rooms similar to those currently in Dunraven and Cascade lodges that were constructed in 1999 and 1993, respectively. The new lodges will replace 407 guest rooms currently available in cabins that will be taken out. Thus, the number of guest rooms at Canyon will remain unchanged. The plan is to keep approximately 300 guest rooms open during the construction of the five lodges. Construction of the lodges is expected to be completed by 2018.
Fishing Bridge RV Park ($17.7 million) - Replacement of most of the infrastructure, redesign of three loops to handle larger RVs, remodeling of comfort stations and the camper services facility, and construction of a comfort station with showers. Construction is expected to take place in 2017 and 2018 when portions of the RV park may be closed.
In all, there will be a net increase of 88 guest rooms in the park.
The bottom line to all this appears to be that the Park Service has decided the time has come to undertake some long-delayed major projects that will be quite costly. In return, they are allowing the concessionaire (and the park, through added franchise fees) to take in additional revenues with added guest rooms, upgraded guest rooms that will almost certainly be rented at a higher price, a longer season for many rooms, and added food and beverage service that will in some cases be subject to an extended season.
The NPS is also taking the unusual step of allowing a 20-year concession contract, double the length of the typical contract for national park lodging facilities. It would be difficult to entice a concessionaire to agree to all the stipulated construction and renovations using a 10-year contract. The minimum franchise fee under the new contract is 6.8 percent of gross revenues. This seems considerably higher than the same fee under the existing contract that appears to be 2.5 percent based on gross revenues and the franchise fee paid in 2010.
Using 2010 gross revenues of $86 million, the new franchise fee of 6.8 percent would produce nearly triple the amount paid by the concessionaire to the Park Service. Unless the concessionaire operates on narrower margins, it would also suggest the cost of lodging and food will increase to cover the higher fee.
The changes will result in more overnight guests, especially in the Old Faithful area where additional rooms will be made available. Consider the masses of visitors and vehicles in this area with the current room count and then add an additional 67 cabins being released for public use. Additional overnight guests, in turn, will require additional employees. And the beat goes on.
David and Kay Scott are the authors of The Complete Guide To The National Park Lodges. Along with updates in their recently released 7th edition of the book is the insertion of full-color images from lodges and settings in the national parks.