Volcano House contract awarded

By PETER SUR

Tribune-Herald staff writer

After many false starts, the National Park Service has awarded a contract to operate the historic Volcano House hotel, with a full renovation complete by early next year.

The winner of the 15-year contract is a partnership between Honolulu-based Aqua Hotels and Resorts, Inc., and Ortega National Parks LLC, a company with 16 years of experience operating concessions within national parks in California and New Mexico. Both companies will be doing business as a subsidary company, Hawaii Volcanoes Lodge Co. LLC.

Monday’s announcement has been eagerly anticipated ever since December 2009, when the last contract, held by longtime concessionaire Ken Fujiyama, expired. The hotel has sat vacant since then, allowing NPS to invest $4 million in seismic retrofitting and fire suppression systems.

Under the new contract, Hawaii Volcanoes Lodging Co. will make additional renovations worth between $2.5 million to $3.5 million.

Approximately $7 million is being invested into the hotel,” said Aqua CEO Ben Rafter.

“We’re totally renovating all the rooms,” said Tanya Ortega, co-owner of Ortega National Parks along with her brother Shane. “We are bringing back the culture and the history, and we’re putting more tradition in as many of the spaces as we can.”

Ortega said there was a five-inch thick pile of improvements that are being planned, and seemed to struggle to know where to start describing them. The contract also covers the Namakanipaio campgrounds and other smaller areas within the park.

Volcano House was built in 1846, although the modern building dates from 1941. During its more than 150-year history, the hotel has been operated by the legendary George Lycurgus, Sheraton Hotels and by Fujiyama’s Ken Direction Corp.

Ken Direction’s contract expired in December 2008, but the company received a one-year extension while the National Park Service hammered out the details of the contract prospectus.

That original prospectus had a 12.5 percent franchise fee, later lowered to 9 percent, and then to its current 6 percent. Other amendments pushed the hotel’s opening further back, and in July 2011 the park announced that because the proposals did not meet the critical requirements for the contract, the concession prospectus was being re-issued.

“We put the second solicitation out and we had a site visit in August (2011),” said Cindy Orlando, superintendent of Hawaii Volcanoes National Park. Interested parties submitted questions, and the park responded in writing.

The solicitation period closed in October and a panel reviewed the proposals the following month. After the panel made its recommendation, NPS Director Jonathan B. Jarvis approved the recommendation late last week.

“We have a new concessionaire. We’re very excited,” Orlando said.

Several more steps need to be taken before the park can open, Orlando said. The new operators will have a 30-day period to sign the contract, the full terms of which are still confidential, and a formal notice will be sent to Congress.

“We’re hopeful that the contract will be executed,” Orlando said, and estimated that could take place in mid-July. After that, “they have 12 months to make all the improvements.” Orlando suggested that could be done in phases, so the hotel could be partially open during the renovation process.

“We expect to have limited openings beginning around July 1,” Rafter said. “And we expect the renovation to be complete sometime in the first quarter of 2013.”

Ortega National Parks is owned by Ortega Family Enterprises and headed by Armand Ortega, Tanya Ortega’s father. The company has also won concession contracts at White Sands National Monument and Carlsbad Caverns National Monument, both in New Mexico, and Muir Woods National Monument and Stow Lake Boathouse, both in California.

“We’re going to totally renovate the bar,” Tanya Ortega said by phone from San Francisco, and promised a “historical renovation” throughout the building.

Asked why the Ortega family responded to a bid to manage the property, she said, “It really needs it. That’s the bottom line.” She said the new operation could generate around 90 jobs.

“We’re investing a lot, and it needs it. It’s a part of Hawaii,” she said. Aqua, she added, was needed for its local expertise. Aqua operates hotels and resorts on Oahu, Maui, Kauai, Molokai and Lanai; the Volcano House would be its first Big Island operation.

“Aqua’s a local entity, and we partnered with Ortega, which has very direct experience with the National Park Service,” Rafter said.

“All of us are really excited, and especially because it’s been closed for almost three years. The chance to reopen Volcano House and to do so in a way that really restores it to what it should be and what it needs to be is something we’re tremendously excited about.”

Email Peter Sur at psur@hawaiitribune-herald.com.