Hawaii bid details disclosed

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A senior transport official in Hawaii has admitted disappointment that DFS emerged as the only bidder for a lucrative new duty-free contract across the Hawaiian islands. A minimum annual guarantee of $60m set by the State Department of Transportation in Hawaii failed to attract further bidders despite the figure lowered to lure interest.

Incumbent operator DFS matched the minimum annual guarantee over a five-year period with the contract starting on June 1.

"We are disappointed that only one bid was received," said the Department's director-designate Brian Minaai (pictured). "This indicates that the law limiting the State to contracting with just one duty-free operator is a disincentive to other potential operators from bidding."

Minaai added that the State expected more than one bid because of the low minimum rent that had been set, compared with the previous $100m annual guarantee sought.

DFS's new master retail concession contract covers airport and off-airport duty-free stores at Honolulu International and locations across Hawaii. Despite being lower than previous years, the terms of the new contract are still greater than recent awards at San Francisco and Los Angeles airports. Under the contract, the State could generate more turnover, over and above the minimum annual guarantee, through a revision of its rent structure.

The details are:

*Minimum annual guarantee (MAG): for each of the five years: $60m
*Apportioned MAG: for the purposes of calculating the total annual rent the minimum annual guaranteed rent will be apportioned 80% to off-airport outlets and 20% to on-airport outlets.
*Percentage rent: 30% of gross receipts in airport stores and 22.5% of gross receipts in off-airport stores.

A further bid for the Honolulu duty-paid on-airport concession including sales of gifts, fashion, luggage, packaged foods, sundries and toys opens on January 30.

• Detailed analysis will appear in Duty-Free News International February 1 issue.