In June 2019, the National Aeronautics and Space Administration made a startling announcement: Beginning in 2020, NASA will permit "private astronauts" to visit the International Space Station, hosting said astronauts for up to 30 days at a time. Granted, these folks will not be tourists, per se, but rather official representatives of corporate and institutional customers conducting "approved commercial and marketing activities."

Still, the announcement marked a significant change in how the ISS will be used in future years, as a revenue-generating asset for the space agency. Private astronauts accepted into the program will travel to the space station aboard NASA-contracted spacecraft built and operated by SpaceX and Boeing, and upon arrival, they'll be provided room and board at a cost of about $35,000 a day.

And now we know where they'll be sleeping.

International Space Station pictured with Earth and Sun in background

Image source: Getty Images.

Introducing Axiom Space

Earlier this week, NASA announced that it has selected Axiom Space to build "at least one habitable commercial module to be attached to the International Space Station." The contract is awarded under NASA's "Next Space Technologies for Exploration Partnerships," or NextSTEP-2, program, which was first announced some five years ago. 

In this particular demonstration project, Axiom will deliver to the ISS an "element" which "will attach to the space station's Node 2 forward port," giving access to the rest of the space station, and also a place for weary private astronauts to lay their heads at night.

No financial terms of this project were revealed, with NASA saying only that the contract is expected to take the form of a "five-year base performance period" possibly followed by a single "two-year option" period. Figuring out the "terms and price" of the contract will be the agency's next step.

Why does NASA want a space hotel?

"Developing commercial destinations in low-Earth orbit" is a priority for NASA, explains the agency -- whether those destinations are attached to the ISS or not. For its part, Axiom has made it clear that it intends to eventually build its own space station(s), fully independent of the ISS.

As part of NextSTEP-2, the program also aims to harness the ingenuity of private business to develop technologies that NASA can employ in future missions, keeping astronauts safe on long voyages to other planets through cosmic radiation-bathed space, for example, or designing habitats in which astronauts can live while working on the moon or Mars.

What comes next

And this may have several implications for companies wishing to participate in the space economy going forward.

The "habitable commercial module" that Axiom is building will facilitate onboarding private businesses to do work on the ISS, creating potential new revenue streams to subsidize NASA's more adventurous endeavors farther out from Low Earth Orbit. With NASA's budget today stuck below where it was in 1972 -- the year of America's last crewed mission to the moon -- the agency's going to need significant new funding to perform planned missions to Mars and beyond in future years. If Congress won't pony up additional cash, therefore, the agency may hope to raise cash from private industry.  

Furthermore, once Axiom proves its concept (as rival habitat-maker Bigelow has arguably already done with its "BEAM" inflatable space station module, already in use as part of the ISS), this company (or these companies) should be well-positioned to win further contracts to help build housing for explorers -- or even colonists -- whom NASA intends to send to the moon in a few years (and Mars a few years thereafter).

Closer to home, NASA says it "also plans to issue a final opportunity to partner with the agency in the development of a free-flying, independent commercial destination" at some point in the future. This latter opportunity should be of particular interest to both Axiom and Bigelow -- which, like Axiom, has expressed interest in building its own space stations independent of the ISS.

NASA, with a 22-year history of operating the ISS (and SkyLab before it), would be a valuable partner for Axiom, able to share invaluable insight into the specifics of how to build, operate, and supply a working space station in Low Earth Orbit. Whoever wins this "final opportunity" of which NASA speaks would therefore have a built-in advantage should "space hotels" and space tourism turn into a new growth industry

For now, we may only be talking about a one-room efficiency attached to the ISS. In future years, though, this tiny NASA contract could evolve into something much bigger.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.