The Little Rock Municipal Airport Commission on Tuesday granted a seven-year lease extension to the concessionaire at the state's largest airport in exchange for a nearly $2.3 million upgrade in concession facilities.
Under the plan, HMSHost will open a sit-down restaurant and bar beyond the passenger screening area at Little Rock National Airport, Adams Field, add a second Starbucks Coffee franchise, in baggage claim, swap out Cinnabon for a Quiznos Sub outlet and eliminate the Ouachita Brewhouse to add seats for the food court.
"With people arriving at the airport earlier because of security concerns, they're looking for a fuller experience and they're looking for a fullservice dining restaurant," said Steve Douglas, a top executive with HMSHost of Bethesda, Md., which has held the concessions contract at Little Rock National since 1997 and operates at 100 airports around the globe. The changes coming with the extension mirror "general trends in the industry." The airport is expected to reap an additional $160,000 in annual revenue from a contract that already produces $844,000 a year on concession sales of $7.2 million.
The plan won commission approval despite concerns over the length of the extension and despite some objections on the commission to the rejection of putting in a name-brand restaurant such as Chili's Southwest Grill or Friday's.
The commission's existing contract with HMSHost, which has been extended once already, expires in 2011. The new contract expires in 2018. The agreement also contains a requirement that the concessionaire spend an additional $125,000 in 2011 and a like amount in 2015 to freshen their concessions, money that is over and above ongoing maintenance. Further, the agreement contains a clause giving the airport the option of buying out the lease if the commission decides to build a new terminal or extensively renovate the existing one.
The upgrade plan is the first since HMSHost reached an agreement with Marcus Devine in his capacity as the company's disadvantaged business partner. Under the terms of the concessions contract between Little Rock National and HMSHost, the latter is required to have a partner that is certified as a disadvantaged business enterprise. Until last year, HMSHost's disadvantaged business enterprise partner was a company owned by Bill Walker, the former state senator and Little Rock mayoral candidate who now is executive director of the Arkansas Department of Workforce Development.
Under HMSHost's proposal, the full-service restaurant beyond screening, tentatively named Ouachita Landing, would have a distinctly local flavor that would include local menu options such as Lindsey's Barbecue, Diamond Bear beer and Yarnell's ice cream.
"We want to incorporate it in the theme; we want to incorporate it in the menu offerings," Douglas said of the accent on the local. "We also want to incorporate it in the style of the uniforms and the training." The restaurant will be modeled after other distinctly locally themed restaurants at airports in Minneapolis and Portland, Ore.
"We'd like to bring some interesting characteristics to the effort," said Judy Ross, the director of properties, planning and development at Little Rock National. "It will make you feel like you're in Arkansas." Both the restaurant and attached bar will seat 80 people. It will be situated where the airport's art gallery is now. The gallery will be moved to a similar-sized area adjacent to the gift shop that leads to the airport's administrative offices.
One option would have been to open a lesser-known restaurant franchise, such as Dewer's Clubhouse, which would likely be less expensive to start up than a more familiar restaurant.
Tom Schueck, one of the commission's seven members, and Larry Lichty, the commission chairman, both preferred better-known restaurants that provide familiarity to passengers.
"If they go into an airport and see something that is branded, they're relatively assured they will get the same thing, whether it's here or Tulsa or San Francisco," Lichty said.
Branded restaurants were also seen as a way of giving Little Rock National cachet.
"It kind of gives you a feeling of arriving, that you've finally reached some level of airport status when you've got a Friday's or a Chili's," Schueck said.
HMSHost and airport officials said Little Rock National could open a Chili's Southwestern Grill but costs associated with its start-up and operation would require extending the lease another four years to 2022 to give HMSHost enough time to recoup its investment. While Chili's might attract more patrons, the airport will collect about the same amount of money because Chili's would be more expensive to operate than a restaurant HMSHost operates without a licensing agreement, the officials said.
Jimmy Moses, another commission member, preferred the HMSHost concept to the brandname restaurants.
"It does create a sense of place," he said. "Chili's and Starbucks, they do create a certain level of `we have arrived,' but they also, to me, are more of just the same." Schueck and Dr. Carl Johnson also expressed concern with the length of the extension.
"That's a long time without any checks and balances by the landlord in my mind," Schueck said.
Other potential concessionaires will have "new ideas and maybe even more money," Johnson said. "It makes sense to be sure we're getting the maximum bang for our buck." But Deborah Schwartz, executive director at Little Rock National, said the benefits to the airport and passengers superseded those concerns.
"My feeling is that in light of the customer-service enhancements and the return on investment for Host's investment here, I feel it is good for the airport and good for our patrons," Schwartz said.
The airport's 2.4 million arriving and departing passengers will begin seeing the new concession outlets beginning in the second and third quarters of next year, said Ross, the airport's director of properties, planning and development.