Airport may choose new concessionaire
Bob Hope Airport officials have been looking to breathe new life into the news and gift concessions in the terminal, and the airfield’s longtime concession operator Paradies Shops Inc. may be on the departure list.
Paradies has been a tenant at the airport since early 1994, but airport staff said in December that its revenues had lagged in recent years and officials began seeking proposals for firms 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 this month.
Three firms, including Paradies, submitted proposals, which were evaluated in March. The proposal from HG Burbank LV, a partnership between Stewart Manhattan Investments Inc. and Hudson Group Retail LLC, ranked the highest. Paradies came in third.
On Monday, based on input from staff, the finance committee of the Burbank-Glendale-Pasadena Airport Authority recommended that the authority’s board approve a proposal to enter into a 10-year concession and lease agreement with the Hudson Group partnership. The board will vote on the proposal on April 20.
Jane Reese-Wilkins, a representative from Paradies, told the finance committee members that firm officials were disappointed and confused by the proposal evaluations and asked that the authority board members “do your due diligence, please” and “make sure that [the scores] make sense to you.”
The proposals were ranked 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.
Hudson’s corporate resources were cited as an asset by evaluators. 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, according to a staff report. It generated more than $1 billion in sales in 2014.
Its partner, Stewart Manhattan Investments, does business as Palazzo Concessions, and has partnered with Hudson at LAX.
According to the staff report, evaluators found that Hudson stood out with its specialty retail concepts, especially for its technology products and books, as well as with its product-specific training for its employees.
The firm 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.
David Freedman, director of business, property and administrative services for the airport authority, had said in December that he hoped an infusion of “new concepts and refreshed product mixes” such as those that other medium-hub airport concessions have adopted might yield positive financial results for Bob Hope’s concessions.
This week, he said Hudson was the only firm to propose a refrigerated mobile kiosk concept. He also cited Hudson’s California presence, corporate resources and local purchasing and product-sourcing expertise as benefits.
Hudson has also offered to retain the current Paradies employees at the airport, Freedman said, and that offer will be included in the lease terms.