Veteran NPS Concessionaire Wins Volcano House Contract

A company that already operates concessions at five National Park Service sites has teamed with a Hawaii hotelier to win the contract to operate the Volcano House.

Hawaii Volcanoes Lodge Company, LLC today was awarded a 15-year concession contract that includes operation of the historic Volcano House hotel and the Namakanipaio Campground within Hawaii Volcanoes National Park.

Hawaii Volcanoes Lodge Company, which registered to do business in Hawaii last September, is owned by Ortega National Parks, LLC and Aqua Hotels and Resorts, Inc.

According to a press release from the national park, Ortega has more than 45 years of hospitality experience, with 16 years operating concessions at National Park Service sites that include Carlsbad Caverns and Death Valley.

“We’re excited to be able to respect the culture and history of the Volcano House and Hawaii,” said Tanya Ortega, of Ortega Family Enterprises.

Aqua Hotels and Resorts currently has 21 operations in Hawaii, but this will be its first on the Big Island, said Ben Rafter, Aqua’s chief operating officer.

“It’s exciting for us because it gives us an opportunity to add a sixth Hawaiian island,” Rafter said.

He told Big Island Now that the new company plans to make between $3 and $3.5 million in renovations to the hotel and dining facilities. Rafter said work is expected to begin July 1 and take approximately eight months to complete.

The park service’s conditions for the concession included minimum renovations of between $2.5 and $3 million and payment of a minimum franchise fee of 6% of gross revenues.

Walt Poole, the park’s concessions management specialist, said information on the franchise fee percentage won’t be available until after the contract has been executed, which can take up to 30 days.

He said it is not yet known how much the fee will bring to the park service, but the previous vendor, Hilo businessman Ken Fujiyama, had about $6.5 million in revenues over the last year of his contract which ended in 2009. However, his operation included the 10 rooms in the Ohia Wing which were not made available in the current contract.

Poole said the park service has not yet decided how it will use the Ohia Wing, which was once the park’s visitor center.

Since the Volcano House was vacated in December 2009, the National Park Service has funded more than $4 million in improvements including fire and safety and seismic upgrades. That includes work done on floors and walls in the common areas.

From the time the contract is executed, Hawaii Volcanoes Lodge Co. will have one year to do its required improvements, Poole said. Those involve upgrades to the Volcano House’s 32 rooms as well as work on dining and other areas, including construction of a new outdoor eating area.

The awarding of a new contract was a drawn-out affair. The National Park Service had originally planned for a 10-year contract to begin in July 2010, with the Volcano House re-opening for guests at the beginning of 2011.

However, in July 2010, the park service began re-soliciting bids for an amended concession, saying that it had lowered its initial franchise fee of 12.5% after some prospective bidders said the higher number was excessive considering that the winner also had to make significant improvements to the facility.

The facility located on the edge of Kilauea volcano’s Halema‘uma‘u Crater has a storied history, beginning with the first structure built in 1824.

Fans of the Volcano House included Mark Twain, who wrote in 1866 that “… the surprise of finding a good hotel in such an outlandish spot startled me considerably more than the volcano did.”

According to the Volcano House nomination form for the National Register for Historic Places filed in 1974, a thatched structure built in 1866 stood until late in that century, but hotel operations shifted in 1877 to a new one-story structure – the first to be built Western-style – that included six guest rooms, two rooms for the manager’s family and a combination parlor/dining room with a large fireplace.

In 1891, the building was remodeled and expanded to include a total of 18 guest rooms.

In 1921, the structure built in 1877 was detached from the 1891 addition and moved 90 feet back from the crater rim. A two-story addition was built in its place and another two-story structure was added on the Ka‘u side. The $150,000 project, which included several cottages, brought the total capacity to 100 guests.

However, the 1891 structure and its additions burned down in 1940, and the current structure was built the following year. A wing was added in 1958.

The historic places nomination noted that the spot picked for the Volcano House was ideal in that it was geologically stable, usually kept free of volcanic emissions by trade winds, and offered panoramic views of the crater as well as steam from cracks for heating and cooking.