STRATEGIC PRIORITY: Mobility Solutions, Infrastructure, and Sustainability
AGENDA DATE: December 13, 2023
COUNCIL DISTRICT(S): 2
DEPARTMENT: Department of Aviation
EXECUTIVE: Kimberly Bizor Tolbert
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SUBJECT
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Authorize an amendment to the concession contract with Hudson Dallas Love Field Concessionaires, LLC, a food, and beverage concession service at Dallas Love Field Airport to exercise an eight-year renewal term to the contract and to increase the street pricing from 10% to 15% for all retail units and from 10% to 17% for quick serve and fast casual food and beverage units - Estimated Revenue: Aviation Fund $7,927,863.00
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BACKGROUND
On March 7, 2021, the City Council authorized a concession contract with HG Multiplex Regali Dallas, JV for a food and beverage concession contract for the construction, management, and operation of several food and beverages units by Resolution No. 12-0706 and retail contracts with HG Multiplex Regali Dallas, JV, Hudson Retail Dallas JV and Host International, Inc. (as assigned to World Duty-Free Group) by Resolution No. 12-0707.
The contract’s primary term commenced on November 1, 2014, for all units, with a contract primary term expiration of October 31, 2021. All four of the above-mentioned contracts have been assigned to Hudson Dallas Love Field Concessionaires, LLC.
In addition, based on the concession’s excellent operation throughout the primary term, but especially during the COVID-19 pandemic when airline traffic was significantly reduced, with drastic staffing reductions and sales lost, concessionaire continued operations to service passengers and airport employees in a very trying climate. Post-COVID recovery progresses but at a significantly higher cost wages, hiring costs, merchandise and food costs have all increased, along with delivery costs and all aspects of operations at the airport. The increases have raised the costs of those operations. As enplanements continue to rise, the food, beverage and retail outlets must be improved. To this end, Hudson Dallas Love Field Concessionaires, LLC projects to spend $6,405,339.00 million in capital improvements and rebranding of some units. 10 retail, food and beverage units will be returned to the city. The Department of Aviation seeks Council approval to exercise an eight-year renewal term for Hudson Dallas Love Field Concessionaries, LLC. Although post COVID-19 recovery progresses, costs have significantly increased. Wages, and hiring costs, merchandise and food costs have all had an effect on airport operators. We seek Council approval to increase the contractual street pricing provision from 10% above street price to 15% above street price for all retail units and from 10% to 17% for quick serve and fast casual food and beverage units.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On March 7, 2012, the City Council authorized the retail contracts with HG-Multiplex-Regali Dallas JV, Hudson Retail Dallas JV and Host International (as assigned to World Duty Free Group) by Resolution No. 12-0707.
On March 7, 2012, the City Council authorized a food and beverage concession contract with HG-Multiplex-Regali Dallas JV by Resolution No. 12-0706
On August 12, 2015, the City Council authorized the First Amendment to the contract by allowing street plus 10 percent pricing, a $10.37 per hour minimum wage rate, and waiving the shared costs provision for food court cleaning, third party inspection and deliveries, and trash removal by Resolution No. 15-1335 and Resolution No. 15-1336.
On October 24, 2018, the City Council authorized the Second Amendment to the retail contract with HG-Multiplex-Regali Dallas JV, previously approved by Resolution No. 12-0707 for retail services at Dallas Love Field for contract No. 2, to (1) reduce the minimum annual guarantee by $308,550.44, (2) exercise two one-year renewal options, and (3) reclaim contract space, Billy Bob’s Texas and upon acceptance of the space, to credit concessionaire for unamortized capital expense, not to exceed $115,584.96 and reduce the contract’s reallocated minimum annual guarantee attributable to the Billy Bob’s Texas space by $74,889.88, by Resolution No. 18-1485.
On October 24, 2018, the City Council authorized the Second Amendment to the retail concession contract with Hudson Retail Dallas JV, previously approved by Resolution No. 12-0707 for retail concession services at Dallas Love Field for Contract No. 3, to (1) increase the minimum annual guarantee by $308,550.44; and (2) exercise two one-year renewal options, for an estimated annual revenue of $308,550.44 by Resolution No. 18-1486.
On September 22, 2021, the City Council authorized the Second Amendment to the concession contract with HG Multiplex Regali Dallas JV, a Dallas Love Field food and beverage concessionaire (1) Exercise both one-year renewal terms for Dunkin Donuts (Pre), Dunkin Donuts (Post), Jason’s Deli, TexPress Gourmet, and Baskin Robbins and (2) add two extension years to the contract by Resolution No. 21-1508.
On September 22, 2021, the City Council authorized the Third Amendment to HG Multiplex Regali Dallas JV Retail and Hudson Retail Dallas JV, LLC concession contracts at Dallas Love Field in order to add two extension years to the contract by Resolution No. 21-1511 and Resolution No. 21-1512.
On October 13, 2021, the City Council authorized a Second Amendment to WDFG North America, LLC retail concession contract at Dallas Love Field, to (1) exercise both one-year renewal terms, and (2) to add two extension years to the contract by Resolution No. 21-1647.
FISCAL INFORMATION
Estimated Revenue: Aviation Fund $7,927,863.00
OWNERS
Hudson Dallas Love Field Concessionaires, LLC
Hudson Group (HG) Retail, LLC
WDFG North America, LLC
Ms. Courtney Thornton, Executive Vice-President
Multiplex, Inc.
Helen Giddings, President
Regali, Inc.
Rupa Dutia, President
Java Star, Inc.
Gilbert Aranza, President