Airport seeking bids for concessions

by Dave Williams and Maria Saporta
Date: Friday, January 14, 2011

Atlanta’s airport is seeking bids for its lucrative food and beverage concessions for the first time since before the Olympics came to town.

Promising a fair and transparent process, city officials have invited potential bidders to a daylong Industry Day, an information session set for Jan. 19 at the Georgia International Convention Center adjacent to Hartsfield-Jackson Atlanta International Airport.

The city is preparing nine requests for proposals, with guarantees built into the RFPs to ensure that the work is spread among various concessionaires.

“We want to make sure that a wide variety of businesses have an opportunity to compete and that we have the best-in-class firms doing business at the No. 1 airport in the world,” Mayor Kasim Reed said.

Airport General Manager Louis Miller said no concessionaire will be able to win more than two contracts from the five large packages and four small packages the airport is putting out for bid. “No one can get the whole airport,” he said.

The bidding process will be closely watched. Huge sums of money are at stake.

Food and beverage concessionaires generated $228.9 million in sales in 2009, down slightly from $232.1 million in 2008, according to figures listed in the RFP documents.

Plans to open a $1.3 billion international terminal at the airport in the spring of 2012 are driving the timetable for rebidding the concessions contracts.

Reed said revenue from the concessions will play an important part in the new terminal’s financial plan. In fact, the issue of concessions came up during meetings with bond rating agencies and potential bond purchasers, he said.

“We are going to make sure we have a competitive process that will earn the city the best financial opportunity to meet our fiscal obligations to build the international terminal,” the mayor said.

Toward that end, the city will seek an increase in its return from airport concessions from the current 11 percent of sales to 15 percent, the industry average.

Miller said the higher return will increase the city’s share of concessions revenue by 25 percent.

Atlanta City Councilman C.T. Martin, chairman of the council’s Transportation Committee, said the desire for an open process is behind the plans for Industry Day.

“We’re trying to reduce the number of people who say they didn’t have time to get all of the information or weren’t properly notified,” Martin said. “We want to make sure people have time to do their research and get familiar with what is expected of them.”

He said past bidding competitions overseen by the city have been marred by a lack of clarity in the selection process and the criteria bidders would have to meet for favorable consideration.

“We need a certain amount of revenue coming in,” Martin said. “[But] we want to make sure people aren’t priced out.”

The bidding comes fewer than six months after a federal jury awarded $17.5 million to Corey Airport Services, which lost a 2002 competition to provide advertising at the airport. Jurors concluded that Corey was deprived of its equal protection rights in a bidding process tainted by political favoritism.

But lawyer Dan Kolber, who represents a concessionaire with a longtime presence at the airport, said times have changed and the city has learned from the Corey case.

“That went on for so long and caused so much adverse publicity,” said Kolber, whose client, Jackmont Hospitality, was founded by the late Atlanta Mayor Maynard Jackson and his daughter. “This is 2011. Nobody questions that you have to have an open process and let the talent pool be expanded.”

The Corey case has stirred concerns in the minority business community that the city could overreact to the federal lawsuit by reducing its commitment to encouraging minority-owned businesses to bid on city projects.

But Reed said minority participation remains a “vital” goal of his administration. “I was raised in Atlanta and believe that inclusion should be part of every significant opportunity in the city of Atlanta,” he said. “That’s a core part of my vision for the city.”

Miller said the goal for participation by minority- and women-owned businesses will be at least 36 percent.

Miller said the terms of all food-and-beverage contracts will be 10 years with a three-year extension if the companies are doing a good job.

The contracts awarded back in 1995, the year before the Summer Olympics were held in Atlanta, were renewed in 2005 for five years. Miller said the bids will be reviewed by a seven-member team, most from the city’s Department of Aviation. Their recommendations will go first to Miller and Reed and then the city council.