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Best of Benjamin Spillman

Gaming Guru

Benjamin Spillman
 

Locals to run airport shop

2 May 2007

LAS VEGAS, Nevada -- One of America's most sought-after airport news and gift stores now has a shopkeeper.

Clark County commissioners voted 6-1 on Tuesday to negotiate with a locally controlled partnership the right to operate a news and gift shop at McCarran International Airport that could generate more than $42 million in revenue over the life of the seven-year contract.

The partnership, Relay-Ayala's, beat out two national airport retail chains for the concession even though one hired a former Nevada governor and the other a former U.S. senator to influence the commissioners' votes.

In the end it was money, not the former politicians, that talked loudest. Relay-Ayala's promised it would pay the airport nearly $100,000 more annually than the next closest bidder.

It was the second time in six weeks the commission addressed the concession, the previous time bids were so close commissioners couldn't decide and sent the bidders back to rework their proposals.

"Under the new rules, we prevailed," said Jay Brown, one of the attorneys who represented Brian Ayala, whose Las Vegas company controls 65 percent of Relay-Ayala's, during the process.

Randall Walker, director of the Clark County Department of Aviation, said the new bids were based on a projection that the store would have $6 million to $7 million in sales annually. The previous bids were based on more flexible numbers that resulted in vague bids, Walker said.

"That got too confusing," said Walker, who recommended the Ayala partnership get the bid. "You had to rely on someone's perception of what might happen."

The Ayala partnership bid $2.4 million annually for the concession, followed by The Hudson Group of East Rutherford, N.J., at $2.3 million and The Paradies Shops of Atlanta at $1.7 million.

With the vote they won the right to negotiate a lease with McCarran for 1,800 square feet of space near the C gates. The commission will need to approve the lease.

The reworked Ayala bid was about $900,000 higher than the highest guaranteed bid submitted to commissioners in March.

Bidding was intense because the shop in question, scheduled to open by the end of 2008, is one of just 16 airport news and gift stands in the United States capable of generating more than $5 million revenue annually.

Concessions at North America's top 50 airports generated nearly $4.2 billion in total sales in 2005, according to the magazine Airport Revenue News.

That year only New York's LaGuardia and Kennedy, Atlanta's Hartsfield, Chicago's O'Hare and Los Angeles airports had higher total sales than McCarran's $183 million. In 2006 concession sales at McCarran rose to $203 million with the airport getting $26.5 million in rent. Slot machines generated another $40 million for McCarran.

To influence the commissioners Hudson hired former Nevada Gov. Bob Miller, now a lobbyist, to represent the company. Paradies brought in former Sen. Richard Bryan.

But in the end it was Ayala, which created a 65-35 partnership with travel retail giant HDS, who won the concession.

"We think we put on the best presentation," Miller said of Hudson, which would have also made a partnership with Ayala had it won the concession, after the Tuesday vote. "I'll bet they thought the same things about themselves."

Commissioner Chris Giunchigliani, the lone dissenter in the vote, said she supported Hudson because she doubts the store will reach the projected revenue of $6 million annually.

She worried that if revenue falls short Ayala could be forced to cut back on service levels or employment at the store or one of its other McCarran locations.