The Fort Mason Hostel at Golden Gate National Recreation Area/Kay and David Scott

Interested in a business opportunity that caters to world travelers at a location on one of the most valuable pieces of real estate in the U.S.? Guests will enjoy outstanding vistas, good public transportation, and excellent restaurants and shopping nearby. Best of all, past data indicates the business will frequently operate at or near capacity. 

If this sounds appealing, the National Park Service may have a deal for you.

The National Park Service in late 2019 solicited proposals for a 10-year concession contract to operate the only remaining hostel in Golden Gate National Recreation Area in San Francisco. The hostel is at Fort Mason on a hill overlooking San Francisco’s waterfront. A second hostel at Fort Barry in the Marin headlands is to be repurposed for other uses. 

Golden Gate NRA is also home to three upscale lodges: Inn at the Presidio, Lodge at the Presidio, and Cavallo Point – The Lodge at the Golden Gate. A fourth lodge, The Argonaut, is part of nearby San Francisco Maritime National Historic Park on Fisherman’s Wharf.  With summer room rates of $300-$500 per night, these four lodges are not in a competitive class with the hostel.

Private rooms in the hostel are small/David and Kay Scott

The Fort Mason hostel currently houses 171 beds in two buildings. To meet building code requirements, the bed count is to be reduced to 154 under the new contract. Beds are offered in private rooms generally favored by couples and small families, and in various sized dorm rooms that are to range from four to 16 beds per room. The Park Service estimates a daily room rate of approximately $50 per bed for the year 2021. Currently, beds in the largest dorms rent for $45 to $55 per night, depending upon dorm size, while private rooms rent for $115 to $140 per night.

The hostel includes a 30-seat café that sells sandwiches, soups, salads, pastries, snacks, and beverages including beer and wine. As you might expect for a hostel, the café’s average revenue per transaction is modest. Hostel guests receive a complimentary continental breakfast. The hostel also generates a small amount of revenue from the sale of convenience items and general merchandise. NPS aggregate revenue projections for 2021 range from $2,340,000 to $2,850,000, over 90 percent of which will originate from accommodations.

The projected $760,000 initial outlay required for the winning bidder is primarily for personal property, including furniture, fixtures, and equipment. It also includes estimated inventory of $10,000, start-up expenses (mostly staff hiring and training) of $100,000, and working capital (funds to take care of expenses until revenue begins) of $100,000.

The contract requires a minimum franchise fee (basically, a rental charge paid to NPS) of 9 percent of total revenues (this fee is currently 7 percent), plus an additional fee for what the Park Service terms a “Component Renewal Reserve” of 11 percent of total revenues for each of the first three years and then 5 percent for the remaining seven years. The latter fee is primarily designed to raise funds for a required renovation in the men’s and women’s bathrooms. 

After learning about the business proposal, we decided to stop by and check out the hostel during a recent Christmas trip to San Francisco.  At the registration desk we met the hostel’s community engagement coordinator, Eryn O’Leary, who guided us through the facility. It was mid-morning and there weren’t a lot of people around, but this was to be expected during the Christmas holiday.  In any case, visitors don’t visit San Francisco to remain inside all day.

Dorm rooms are also available/David and Kay Scott

The guest rooms are small and basic, places to sleep but not much else. The common area with couches, chairs, and a fireplace is a nice size and likely where most guests would spend their spare time.  The café has a welcoming appearance and is a good place to spend time reading a book or surfing the Internet.

Guests in both the dorms and private rooms are required to use community bathrooms. Utilizing these during our own visit, it was quickly obvious why major bathroom renovations are a required part of the new contract. On the plus side, guests arriving in a vehicle are not required to pay a parking fee. Parking permits are required, but those are available at the registration desk without charge. Considering that guests of downtown hotels often have to pay $40 to $50 per day for parking, this is a real bargain.

Proposals for the Fort Mason hostel must be received by NPS by March 5. The contract has a term of 10 years with an estimated effective date no later than December 31, 2020.

David and Kay Scott live in Valdosta, GA and are authors of Complete Guide to the National Park Lodges (Globe Pequot).