The municipality has shelled out $2.7 million for the hostel property on Alta Lake Road, with the aim of creating a new public park.
The deal was sealed several months ago as part of an arrangement with Hostelling International (HI). In addition to selling the land, HI agreed to buy a new hostel at the athletes' village, built as part of the $161 million development.
The new hostel will cost $8.9 million.
"It was a win-win for everyone," said Alistair McLean, chief executive officer of Hostelling International, Pacific Mountain Region.
"We feel it was a fair price for the land.
"We walked away happy as did the municipality."
The municipality has long identified waterfront parkland as something it needed to round out its summer amenities.
"The municipality (was) looking to acquire more parkland and lands around water," said Keith Bennett, general manager of resort experience at the municipality.
He added that the move to buy the hostel land was a strategic decision "recognizing its value in the future."
The future of that land is still up in the air and will depend on community input. It is located south of Rainbow Park but is not accessible by Valley Trail. The property is accessed by Alta Lake Road.
"A lot of these things are depending on when we can afford them," added Bennett.
"It's a post-Games focus."
In the meantime, HI is leasing the waterfront location until it can move into the new development at the athletes' village.
The new hostel will house some of the 2,400 athletes during the 2010 Games. HI is anticipating opening the hostel to guests by June next year.
The move marks the end of an almost 30-year run for the hostel on Alta Lake Road.
HI bought that old fishing lodge in 1972. That year there were 2,000 overnight guests.
For the 2008-09 season there were more than 9,000 overnight guests in the 25-room hostel.
McLean said they have been in discussions with the municipality for years, looking for another site to accommodate the needs of its growing number of guests. The athletes' village presented a great opportunity to build a "purpose-built" hostel.
It also helped the municipality too, with HI partnering to share some of the burden of the multi-million dollar project.
"It was a good way of providing athlete beds for the Olympics," said Joe Redmond, president of the Whistler 2020 Development Corporation, the municipal subsidiary building the village.
The new location is also a good fit for hostel guests, close to great hiking trails, in the heart of a local community, and easily accessible by public transit.
The old place, while nestled on the shores of Alta Lake, also had some drawbacks.
"It's out of the way and people want to be a little closer to the action," said McLean.
"Both places have their qualities but it is time to move on."
Bennett could not say how much it would cost to create a park from the hostel site.
It could not be compared, however, to the $3 million line item in the current financial plan for the Cheakamus Crossing Park. Plans for that include dedicated sport fields.