Bob Hope Airport's longtime concession operator, Paradies Shops Inc., will be departing from the terminal this spring, following the award of the latest concession contract to a new vendor.
The Burbank-Glendale-Pasadena Airport Authority this week approved a new 10-year concession-and-lease agreement with a joint venture that includes the major concessionaire Hudson Group Retail LLC to operate the airport's five retail news, gift and specialty shops — four in Terminal A and one in Terminal B — when Paradies' lease expires at the end of this month.
Paradies has been a tenant at the airport since early 1994, but airport staff said in December that its revenues have lagged in recent years. Officials began seeking proposals for a new concession operator to offer an infusion of "new concepts and refreshed product mixes" that might yield positive financial results for Bob Hope's concessions.
Three firms, including Paradies, submitted proposals, but airport staff determined that HG Burbank LV, a partnership between Los Angeles-based Stewart Manhattan Investments Inc. and Hudson Group, had made the strongest offer based on several factors.
A proposal from Paradies ranked last in the evaluation, and one from a third firm, Pacific Gateway Concessions, also failed to displace the Hudson proposal. Pacific Gateway Concessions is privately held and based in San Francisco.
Representatives from both firms had said they were disappointed in the outcome.
Evaluators ranked the proposals on several factors, including the proposed concept, design and sustainability; qualifications and experience; the proposed financial offer; the customer service, management and operations plan; and the transition plan.
According to a staff report, evaluators found that Hudson stood out with its specialty retail concepts, especially for its technology products and books, as well as with product-specific training for its employees.
Officials cited Hudson's corporate resources as an asset. The firm is a major concessionaire with locations in six other California airports, including Los Angeles International Airport, and operates more than 700 shops in 70 airports and major transportation centers across North America, according to a staff report.
It generated more than $1 billion in sales in 2014.
Hudson Group is owned by the Swiss travel retailer Dufry AG, which operates more than 1,650 shops in airports, cruise ships, seaports, railway stations and downtown tourist areas around the world. Stewart Manhattan Investments does business as Palazzo Concessions and has partnered with Hudson at LAX.
The joint venture offered an initial annual guarantee of $925,000 to the airport, plus rental fees of more than $52,000 and a proposed capital investment of more than $1.55 million. Paradies had offered a $900,000 annual guarantee and $1.45 million in capital improvements.