GIAA signs largest revenue-generating contract in history - KUAM.com-KUAM News: On Air. Online. On Demand.

GIAA signs largest revenue-generating contract in history

by Mindy Aguon

Guam - Just days after denying a protest filed by DFS Guam, the A.B. Won Pat International Airport Authority signed the largest revenue generating contract in its history. 

It's a done deal.  Lotte Duty Free Guam, LLC has signed a specialty retail concession agreement with the A.B. Won Pat International Airport Authority that will immediately boost revenues for the airport.  The agreement was finalized just days after the airport denied a protest filed by DFS Guam, LLP. DFS Guam has held the concession contract for the last 30 years, without having to compete for the contract.  The company filed a protest alleging there were irregularities with the procurement process and specifically claimed that board members had conflicts of interest and Lotte acted inappropriately during the procurement process. 

But the airport in a 36-page response found DFS' protest to be frivolous and the claims within it to be without merit.  Additionally the airport believes DFS' protest was solely to disrupt the procurement process and as such wants DFS to pay the costs incurred by the airport to address the protest.  Once the denial was issued on Friday, airport executive manager Chuck Ada says negotiations with Lotte picked up where they left off prior to the filing of the protest. 

Under the terms of the new agreement, the airport's guaranteed rental revenues will increase from the current $4.5 million to $15.4 million with the potential for further increased revenues based on percentage rent.  In addition, Lotte has agreed to $23 million in airport improvements, $17 million to be completed in the first year. "In addition to the $17.9 million in the first year for the capital improvement we are looking for anywhere between $2.9 million for renovations to the bathrooms in the concourse in addition to the food court," he said.

Based on the agreement revenues won't just come from duty-free sales at the airport, but also off GIAA property. "I think that was a great show of partnership with regards to Lotte to provide to the airport 1% of all sales from their downtown store once that's put online I believe in the next three years so we expect to see additional revenues on top of the significantly increased $15.4 million," he projected.

Ada says the extra revenue only means good things for the airport, noting, "It means a huge ability for the airport to address about seventeen projects that we  are currently sharing with our signatory airlines to ensure that we are able to not only maintain industry standards but increase airport operations for expansion."

Those projects include addressing the co-mingling of departing and arriving passengers within the international arrivals corridor, increasing ticket counter space, expanding the parking level, replacing the ARFF facility, and replacing seating within the terminal, just to name a few.  With the signing of the agreement, the airport will put DFS Guam on notice of a 60-day transition period.

Lotte Guam transition director Gerry Perez says the company is looking forward to a long-term partnership with GIAA in improving the visitor experience at the airport.  He indicated the company is excited about moving forward and investing in helping Guam improve its competitiveness as one of the most successful visitor destinations in Asia.  Perez adds Lotte will be discussing its plans for the airport in more detail in the coming weeks.

DFS meanwhile issued a statement, saying they are reviewing the denial letter from the airport but they believe the response actually raises even more questions about alleged improper behavior and efforts to sway voting to Lotte.  

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