National Parks

Yes, the Government Can Turn Even the Grand Canyon Into a Money Pit

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Grand Canyon
Chensiyuan

Grand Canyon National Park has unrivaled views, and a steady flood of tourists eager for a look, and for a place to get a bite and sleep while they're visiting. So why can't the National Park Service (NPS) get companies to bid on taking over the hotels and restaurants at the rim—facilities that you think would be gold mines for anybody with a bit of business sense?

Could it be because the NPS wants the new concessioner to assume tens of millions of dollars of debt to the last vendor, while keeping less of the proceeds than its predecessor? You bet.

"We were ignoring a debt that was accruing in the park," Grand Canyon Superintendant Dave Uberuaga told Fronteras. The NPS currently owes Xanterra, a longtime concessioner descended from the old Fred Harvey company, $157 million. That's actually an improvement. When the park started unsuccessfully soliciting bids, the amount of the Leashold Surrender Interest—the sum owed to Xanterra for capital improvements it made to aging facilities—was actually $198 million. DNC Parks & Resorts picked up $41 million of that as part of a smaller contract at the park, leaving the NPS to figure out what to do with the rest of the debt it had allowed to accumulate.

Under a 1998 law, contracts must now (with some exceptions) be put out to bid every ten years. But if a concessioner loses a contract, it's owed the value of capital improvements to be paid by the United States government or the successor company.

Grand Canyon
National Lampoon

Xanterra has managed facilities at the park for decades, paying the government 3.8 percent of gross revenues for the privilege. But it also shouldered the cost for improving the facilities in anticipation of being compensated…eventually. The contract is now up for rebidding, and the company doesn't seem very interested in continuing its relationship with the NPS (neither Xanterra nor the National Park Service responded to questions by press time). In fact, nobody seems interested in the current terms—none of the bids received adhered to the NPS's specified conditions.

So Grand Canyon National Park sweetened the deal by paying $100 million of the money owed, with much borrowed from other parks so that the new concessioner would "only" have to pay $57 million. But the new solicitation also specifies that the lucky "winner" will have to pay a minimum franchise fee of 14 percent for the 15 year life of the contract, making the arrangement rather less lucrative than the one Xanterra had for so long, unpaid debt aside.

And there just might be some concern that the NPS won't be any better in the future about paying debts owed to concessioners—especially since it just ran up a hefty tab to other parks that want their money back. The park estimates annual gross revenue for the contract at $66.1 million, which you'd think would mean a chance at healthy profits. But if 14 percent of that goes to the government, the properties have to be maintained and improved, and you're starting off with a big bucket of red ink…

The Grand Canyon may be the biggest damn hole in the world, and a popular one at that. But the federal government has managed to make a huge tourist draw into a money-loser.

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    1. They make pretty sunsets.

    2. So that’s where the money goes!

      1. “If you love America, you throw money in its hole!”

  1. When you find yourself in a hole stop digging.

    1. I see what you did there.

      And I don’t approve.

  2. Maybe the NPS should just run the concessions themselves? Not only could they keep 100% of the profits but think of all the jobs they would create.

    1. My visit there over the summer led me to believe that they already did. The overall experience at one of their dining establishments was reminiscent of the worst public school cafeteria you could possibly imagine.

      1. You must have been there a while back. We were there two years back, and found the lodgings, food and particularly the service to be quite good. Not five star by any means, but, heck, I’m not there for the finest linens or haut cuisine, I’m there for the views! Was it cheap, no, but the rooms were clean and comfortable, and we heard elk rutting all evening, the food was competently prepared, and the prices were no worse than in any other tourist driven region (I live in one).

        1. Any videos of the elk?

    1. Hey buddy, you’re muscling in on Ted S.’s territory. Tread lightly.

  3. I blame the Tea Party Caucus.

    1. Bo concurs.

  4. Beverly D’Angelo: original MILF.

    Discuss.

    1. I always had a thing for Goldie Hawn. (Back in the day)

    2. Not bad, but the one who knocked my socks off back in the ’80s was Anita Morris. Hubba-hubba.

  5. I don’t know about “original” but she’s definitely the first one I remember from my childhood.

  6. Hey JD, have you talked to Warren Meyer at Coyote Blog? He runs a concession company that does this stuff and could give you an insider’s perspective.

    1. I was thinking the same thing. I’m sure he has some unique insight to this issue.

  7. Why would anyone enter into a deal with The Eye of Sauron?

  8. Just wait ’til he Park Service tells them they have to pay $15/hr minimum.

    1. Only $15? Sounds like a steal.

    2. Don’t forget the bennies for the sodomites!
      Lucky Sodomites.

  9. What’s worse than a money hole? A money hole on rails!

    “For 43 years, Amtrak has operated at a loss. It stays in business thanks to a healthy annual government subsidy of around $1b a year. It also benefits from the busy Northeast Corridor, which accounts for a large chunk of its overall revenue.”

    http://www.businessinsider.com…..cts-2014-5

    1. …”It also benefits from the busy Northeast Corridor, which accounts for a large chunk of its overall revenue.”

      Ah, yes! The money going to the power! Wonder why that’s such a busy route.

  10. Government could and inevitably would fuck up even a wet dream.

  11. But health care will be different…..

  12. Seriously? The federal government is quibbling about 150 million dollars? That’s 22 minutes of spending.

    1. But it’s 22 minutes f spending they don’t have…

      Oh, wait…..

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