A nearly three-month bid process for concessionaires inside the revamped Owen Roberts Airport terminal is due to end Friday.
Airport officials said this week that the concessions companies hired will help create a “memorable shopping and dining experience” for air travelers at the new terminal, which, in turn, will increase revenue for the Cayman Islands Airports Authority.
“To ensure we meet these objectives, it is incumbent upon the authority to make the proper selection of future vendors who will have the highest possibility for successfully operating in a unique business environment,” a statement from the authority read.
The airports authority statementlong was made following public complaints by Cayman’s Small Business Association, which alleged that smaller local companies were effectively being cut out of the bid process.
“Confusing paperwork, possible costly consultancy fees to prepare the request for proposal and onerous bid requirements all point to eliminating the small businesses in the Cayman Islands Airports Authority bid process,” the Small Business Association noted in an unsigned statement last Friday.
Consultants to submit the bid in order to have a “viable shot” cost $3,000 at a minimum, according to the association. Additional costs for architectural design of the concessions space would price out small operations, the association claimed.
“As a small business owner, the question is ‘how likely am I to be successful in this process?’ up against large businesses that are stalwarts in food and beverage service and retail giants in jewelry, luggage, etc., with significant investments across the Cayman Islands,” the statement continued.
The airports authority said items like revenue projections and concept designs would be important to the overall concept in the concessions area.
“The airport is the front door to our country and the last impression for our visitors returning home,” the authority noted.
The fight over airport concessions space under the new Owen Roberts terminal has been brewing since at least October 2014, when the Cayman Compass first reported that airport retail stores would have to compete for current, existing space they maintain.
The airport retailers were notified of the decision in memos sent in late September 2014 that also indicated the Cayman Islands Airports Authority will not approve standard five-year contract extensions for concessions businesses until it is finished with an upgrade of the terminal.
“We will be renewing all concessions leases for one year,” a letter sent from Bianca Moore-Downey, the airports authority’s acting chief of customer and commercial services, indicated in the memo. “Upon expiration, the renewal term will be reviewed again. This will allow us to position ourselves to implement our new business strategy to coincide with the completion of the [new] departure hall.”
Currently, businesses that sell food, gifts, alcohol, tobacco and other retail items in the departure lounge of Owen Roberts International Airport usually have five-year options for lease renewal and pay a monthly flat fee to rent the space.
According to the memo, that practice will change to a “revenue-based business model” to include a minimum annual guarantee from the concessionaires, likely to be expressed as a percentage of profits.
“This model provides mutual benefits to both landlord and tenant, such as a direct economic relationship between sales and rent and shared financial risk,” the airports memo stated. Current concessions tenants would be invited to participate in the bidding process once it gets under way, airports officials said.
The switch to a revenue-based model is not a big deal, according to Airport Tenants Association vice president Robert Hamaty, who is president of the Tortuga Rum Company, one of the airport concessions businesses. Mr. Hamaty said similar agreements exist with Tortuga’s operations at Bahamas, Jamaica and Barbados airports.
However, he said his company has concerns about a competitive bid process if it is opened up to major multinational companies that could significantly underbid smaller local and Caribbean-based operators.