Grand Canyon National Park seeks temporary concessionaire contract for transition
GRAND CANYON, Ariz. - National Park concessionaire Xanterra South Rim, L.L.C and Grand Canyon National Park have not agreed on a new contract, but they might agree that a temporary, contract could avert a massive layoff.
On Oct. 31, the park put a short-term contract out in hope that concessionaire companies would place bids.
Xanterra, the larger of the two concession companies at the park, operates lodging, restaurants and other services at Grand Canyon.
The current contract between Xanterra and the park expires Dec. 31.
Grand Canyon National Park Superintendent David Uberuaga said the temporary contract is not exclusive to Xanterra and could be awarded to any concessionaire.
"We have authority to enter into a temporary contract to make sure nothing gets shut down and operations get maintained through the holiday and everything else," Uberuaga said. "So our visitors can make their plans and not be disrupted in any way."
Xanterra filed a lawsuit against the park on Oct. 7, stating the contract offered them by the park did not provide adequate housing for their employees and nearly tripled its franchise fee.
Uberuaga, said concession contracts are designed to create competition for businesses operating within the park. Because the park did not receive responsive bids for the long-term contract, the park decided a temporary contract was necessary.
According to Uberuaga, the park extended Xanterra's contract several times in an attempt to reach an agreement on the terms of the contract.
In the latest prospectus released by the park, the franchise fees have been reduced from 14 percent to 10 percent for the first five years and remain at 12.5 percent after that time.
The park also offered a 'reasonable allocation of housing' based on staff needs including 28 winterized cabins and 28 converted historic cabins, used by guests, to be allotted as employee housing.
In the prospectus, the park states there is no guarantee of sufficient housing within the park for all concessionaire employees. The prospectus adds concessionaires may need to pay some employees higher wages in order for them to find housing outside the park.
Xanterra recently issued a notice to its employees, stating if a new contract is not signed, it could mean massive layoffs for employees beginning Dec. 31.
According to Bruce Brossman, Xanterra regional director of sales and marketing, the letter was meant to help Xanterra employees decide what to do in the event a contract is not signed.
"By law, we have to issue a Warn Document," Brossman said. "We are encouraging (employees) to seek employment if the contract does not go forward,"
According to Brossman, Xanterra advised their employees to seek positions with Delaware North, the smaller of the concessionaires at the Canyon.
According to Xanterra, Delaware North will give first consideration to Xanterra employees for any available positions within their company.
Approximately 980 Xanterra employees would be affected by a layoff.
Responses on the recent prospectus, with revisions, are due Nov. 19.
"There is no way we can have the official contract by Dec. 1," Brossman said. "There will have to be a temporary solution in order for things to go forward."
Until Xanterra or another concessionaire signs a contract with the park, the temporary contract will act as a stop-gap for the park. Uberuaga said the contract is a big investment for the park and provides an enormous business opportunity for the winning concessionaire.
"My focus has been on a great business opportunity for any concessionaire with a reasonable return to the government," he said, "This is a big contract and it's not easy for someone to step in and take over a hundred million dollar operation. We are trying to create the environment that we may do so."
The park hopes to award the temporary contract as soon as possible.
"We want to get a temporary contract in place as soon as we can," Uberuaga said.
Xanterra and the park will review the terms of the contract and move forward from that point.
"We hope they'll be favorable," Brossman said, "We're working for the benefit of our employees, the stress and trauma on our employees is unfair."
Uberuaga said the park is also hopeful the short-term contract will be signed to allow the park and concessionaire time to reach a favorable agreement.
"The prospectus window for the current offer is soon," Uberuaga said. "We will come to a temporary contract and that could lead directly into a long term contract,"
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