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David Pendered

Atlanta airport issues first delay in bids for lucrative concessions contracts

By David Pendered

The first delay has been recorded in Atlanta’s process of selecting companies for the multi-billion-dollar food and beverage concessions at Atlanta’s airport.

The three-week delay is the first in an aggressive schedule designed to have contracts signed in September by the Atlanta City Council. The council’s vote likely will authorize Atlanta Mayor Kasim Reed to sign the contracts.

Airport General Manager Louis Miller said the delay stems from the city’s decision to amend the package of “requests for proposals” that were released in March.

“Not surprisingly, both large and small proponents have requested additional time to fully assess the changes to the RFPs,” Miller said. “We are happy to accommodate our proponents in a way that still allows us to meet our project deadlines.”

The main deadline that affects passengers is for new food and beverage shops to be open by the end of 2012 at Hartsfield Jackson Atlanta International Airport.

However, the delay in RFPs also affects the retail shops that are to open in the new concourse when it opens in Spring 2012.

The city’s review process is expected to last 90 days, Miller told the City Council’s Transportation Committee in March. The selection team, whose members will not be identified until after its work is complete, will work under the guidance of the city’s Procurement Department, according to airport concessions director Paul Brown.

The amendments respond to more than 329 comments from vendors that had been received by April 12 – a week after the city met with more than 500 businesses interested in the contracts, Brown said.

The new deadlines for RFPs range from July 12 through July 18. The original deadline started June 21 and also extended through the week.

“Many of these changes were implemented following extensive feedback from the RFP proponents themselves,” Miller said.

“The reason for extending the RFP deadlines is partly due to the publication of the First Addendum, which accomplishes the following:

  • “One – reprints and answers more than 300 proponent inquiries; and,
  • “Two – describes the changes made to the document in exacting detail.”

The new concessions contracts represent a lucrative business for both vendors and the airport. The food and beverage contracts extend a decade and include a potential renewal for three years.

Consider the profits represented in the following numbers:

  • The average rent paid by a food and beverage concessionaire is about 10.7 percent.
  • That rate brings the airport about $240 million a year.
  • The airport expects to collect about $270 million a year once the new rate structure in the contracts take effect, Miller said, when the average rent will be 15 percent.




David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.


1 Comment

  1. Burroughston Broch May 31, 2011 9:20 pm

    From the last paragraph (if correct) one can calculate that the City expects the total concessionaire sales to go down by 20% under the new arrangement:
    $240million/10.7% = $2.24billion sales under the present arrangement
    $270million/15% = $1.80 billion sales under the new arrangement

    If I were a potential concessionaire, I’d look elsewhere. According to this, my sales would be expected to go down by 20% while my rent would go up 40%. So, if I had $10million in sales under the present agreement I would have $8.9million left after I paid my rent; under the new agreement I could expect $8million in sales and $6.8million after I paid the rent, leaving me $2.1million worse off.

    It doesn’t seem an attractive package, but then that’s how government thinks.Report


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