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Grand Canyon averts interruption of services at South Rim by awarding temporary contract

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FLAGSTAFF, Arizona — The National Park Service has averted a shutdown of some of the Grand Canyon's iconic hotels and mule rides by awarding a temporary contract for services at the canyon's South Rim.

The one-year contract goes to Xanterra Parks & Resorts Inc., which has been providing those services for decades. Its current contract ends Dec. 31 and reached its limit on extensions.

Three companies expressed interest in the temporary contract, which will be in place while the Park Service solicits bids for a 15-year contract. Efforts to have the long-term contract in place before Xanterra's expires failed, with no one submitting a bid in three previous bidding rounds that met the Park Service's terms.

Services will continue uninterrupted, with the exception of a historic watch tower where Xanterra ran a gift shop. The Desert View Watchtower built in 1932 is the highest point on the far east end of the South Rim, with the Painted Desert to the east and the San Francisco Peaks to the south. It will be shut down for up to five days starting Jan. 1 as it transfers back to the Park Service for use as an interpretive center.

Xanterra President and CEO Andrew Todd said the company was pleased to reach an agreement on a temporary contract.

"This will allow the hundreds of Xanterra employees to continue providing outstanding, uninterrupted hospitality to the millions of travelers who visit this national treasure each year," he said in a statement.

Park Service spokesman James Doyle said he did not have further details on the temporary contract or a timeframe for when the agency might reissue a proposal for the long-term deal, the provisions of which are expected to be revised substantially.

The temporary contract is worth about $66 million in gross revenue per year. The Park Service said it will pay Xanterra $100 million to cover a portion of the equity the concessionaire has built up in making improvements to South Rim facilities when it assumes the temporary contract.

Xanterra, based in Greenwood Village, Colorado, has about 980 employees at the Grand Canyon, 125 of who perform services that have been transferred to a smaller contract awarded to Delaware North Companies Parks & Resorts. That 15-year contract begins next year for food and retail services at Grand Canyon Village, Yavapai Lodge and Desert View, a public laundry facility, showers and a campground. It's worth about $30 million a year.

Xanterra had sought to have that contract put on hold and bidding for the more lucrative South Rim services contract halted. Xanterra alleged in a federal lawsuit filed against the Park Service that the larger contract unfairly benefits a competitor, would result in a money-losing operation and had an unfair allocation of housing.

The Park Service denied those allegations and argued they were moot since the proposal for the larger contract has been canceled. A hearing scheduled earlier this week in U.S. District Court in Denver was called off so that Xanterra and the Park Service could finalize a settlement, court documents state.

Neither the Park Service nor Xanterra would comment on the status of the lawsuit late Friday.

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