Airport bid pushes out small businesses
ORIA interior, artist’s rendition
(CNS Business): Some of the small business owners that are currently running retail concessions at Owen Roberts International Airport believe they are being pushed out of the bids for the new space. The Cayman Islands Small Business Association (CISBA) has accused the airport authority of creating a request for proposals with confusing paperwork, forcing bidders to engage costly consultants to meet the “onerous bid requirements” and architectural drawings. This, CISBA claims, points to eliminating the current tenants from the bid process.
The Cayman Islands Airport Authority, however, has shaken off the criticism and said that there was wide discussion a year before the bid about the new concessions. The CIAA said it was looking to “exceed guest expectations by creating a memorable shopping and dining experience through appealing retail and food and beverage concepts” at the new airport and it intended to “make the proper selection of future vendors”.
But in a recent press release, CISBA said this was an unfair situation designed to ensure that the new airport food and retail opportunities will go to the the larger business owners who already dominate the local duty free market.
“The businesses currently enjoying this opportunity have been serving travelers for many years. Following the review of the process the small business community is at a clear disadvantage,” it said.
With just days to go before the bid closes, CISBA said businesses would need to hire a consultant for their applications to have a viable shot.
“CISBA has researched this and it is a minimum investment of CI$3,000 to help conceptualize, draft and submit all requirements inclusive of proof of two years balance sheet and income statement,” the association said, and railed against the need to provide designs of how the retail or food service space would look and demonstrate an investment level in fit-out.
The association questioned the likelihood of success in this process for small business owners “up against large businesses that are stalwarts in food and beverage service and retail giants in jewelry, luggage, etc, with significant investments across the Cayman Islands. CISBA believes the requirements already defeats the small man in this process.”
CISBA said the revenue sharing model for the concessions, which shaves off rent expenses from gross sales, isolated from the profit and loss and outside consideration of overhead expenses, has “baffled” them.
The association said the airport should have offered methods that were more reasonable for micro and small businesses. In a last minute appeal to the authority to consider the small businesses when making the decision, CISBA offered to engage in discussion with the airport.
But in a release of its own Tuesday, the airport said the proposed design standards, methodology and revenue model was widely publicised and had already been the subject of public debate.
“The resulting RFP took into account all of this discussion and represents the best solution to meet the CIAA’s objectives while providing opportunities for local businesses,” the airport said.
The airport said its objectives were to “exceed guest expectations by creating a memorable shopping and
dining experience through appealing retail and food and beverage concepts”, as well as to optimize revenue for the CIAA.
“To ensure we meet these objectives, it is incumbent upon the Authority to make the proper selection of future vendors who will have the highest possibility for successfully operating in a unique business environment,” the CIAA said, justifying the requirements of the RFP.
“We have established a fair and transparent bidding and evaluation process to garner the information we need to make the best decisions possible. Our standards and minimum qualifications complement the elegant design of the new airport terminal,” officials stated.
Making it clear that the authority is looking for something different for the future, it said, “The airport is the front door to our country and the last impression for our visitors returning home. The CIAA is passionate about ensuring our guests have an outstanding travel experience by providing a modern facility, and amenities we can be proud of.”
Category: Local Business, Retail, Small Business, Transport
One of the most unfair situation that has happened in Cayman since my time here. Very unfair and insulting. To look down on the poor hard working Caymanian and I mean born and bred Caymanian that has stuck it out through the slow and rough times at the Airport. What an insult to even entertain the thought that if the big fish cant make it work and pack up and leave within a year that the poor Caymanian will again want to do business there. All those that get their hands greased will have to take them over.Has the Consultants come up with a figure to award the poor Caymanians who have to give up their business? Just suppose they could not survive without it? Then to make fun of their merchandise…. You big time Christians prefer to support liquor and cigar stores. Merchandise in the other stores has been changed over the years to suit the market. I realize that you Actuaries don’t have a clue about marketing. When these Tourists are on their way back home they are broke because Cayman is so over priced that items above ten dollars is not affordable. They are interested in a Cd a Tee shirt a souvenir cup or any little frivolous souvenir item. Anyhow the best of luck to the Big Fishes and hope that some people are well paid. God is still on his throne.
I cannot see any of the existing operators losing their locations, but we really do need some competition in the food and beverage area.
The current food and beverage area is terrible. Awful food which is rarely fresh, terrible coffee, and rip off prices.
Provision could be made for freestanding ‘carts’ like in malls for smaller vendors. The process being followed for the larger fixed units however is necessary to ensure the needs/expectations of travellers are met, and that the tenants of those units make a meaningful contribution to the cost of redeveloping and operating the new terminal. It’s all entirely standard.
Bids will be evaluated on a 100 point system. If you are a Caymanian business, you get a 4 point advantage…4%, that’s all! If you are already in business at the airport, you get another 6 points. The remaining 90 points are completely up to the evaluation committee and are entirely subjective. So much for looking out for Caymanians and the local economy.
Whoever the consultant is on this project, they obviously didn’t do their homework on Duty Free in Cayman. Very little of what the Duty Free stores sell is actually duty free, but the stores still have to sell at “Caribbean Duty Free” prices. The very nature of the business is to offer products at a savings to US Retail. If you don’t do that, you don’t have a business.So there is a price ceiling that they can’t go above, and the landed costs are higher than normal due to duty charges on what were traditionally duty free items. There is not sufficient margin in the “Duty Free” business in Cayman to pay anybody 20% off the top. In fact, no competitive (legitimate) business of any sort, large or small, makes enough margin to afford 20% off the top.
Restaurants on the other hand can easily raise their menu prices by 6% to pay their concession costs.
All you PPM voters should be real happy then! Da wag ya get!
First of all, I must say I think CNS has the passionate readers of any of our local newspapers.
I suggest local business people simply sit back and remain patient. Once the international companies build out the airport spaces with over the top fittings, and find they cannot make a reasonable profit while paying that 20% tariff, they will break their leases leaving the fittings behind in empty space after empty space.
CI Airport Authority will then welcome you in with nearly fee rental terms just to fill those vacant slips. After all look at any new airport a year or so after opening. You will see I speak from experience.
The more likely scenario is that spaces will be awarded and the successful bidders will immediately go to the politicians and start negotiating for lower and sustainable rates. Same thing happened at the Port. Not fair to the numerous businesses who won’t be submitting a bid based on the 20% concession fee which nobody will be able to pay long term. This is a can of worms that will end up in the courts.
Look only large companies can do things right. Mr Dart’s companies should run the airport as they always do things first class!
I think what is going to happen , is that these large Companies would have Caymanian partners set up owning each store , then shortly after the store owners would form an association , then they would have the power to bargain a better deal with CIAA for their spaces .
CISBA watch everything and put on your investigative hats .
I wonder how would CIAA know if books are not cooked when it comes to collecting their rent ? Or is 20 percent fee going to be gentlemen hand shakes agreement .
As usual it all comes down to who scratches backs the hardest.
This is absolutely ridiculous that CIAA would do this to local companies. Sounds like some of the big global companies that dominate the airports internationally may have influenced this
My guess is that the consultant that was hired to put this together has a history and/ or a direct relationship with the big international players and he made sure to write this in their favour.
Exactly. RFP’s are specially written to include or exclude specific businesses. And as we talk about what the cost is for the companies to submit, what will the real cost be for the CIAA for the preparation of the RFP and the “timely” response to the applicants?
No business and especially no small business can afford to pay out 20% of their revenue and survive. CIAA better get ready for lawsuits when they have to changes the rent structure after all the shops can’t pay rent.
It is obvious that whoever consulted the CIAA was only interested in big business but not local big business. Only the international companies and Dart are setup to handle these types of bids and sustain the exorbitant Re ts they are suggesting.
At 20% it doesn’t matter who wins the bids they will he closed within the first year. The small businesses are probably better off waiting until the wheels fall off of this one and pick up bargain spaces when even the big ones can’t afford it.
Let’s make the airport look just like Camana Bay! After all that is the “new” Cayman.
That would be super and a great improvement.
I wonder if CIAA, is going to enforce the rules that it’s so passionate about after these new business opens at the New Airport ? Or are these rules just for the bidding system ?
I think it’s just another way to say, Caymanians needs to be Educated to get the jobs .
What I would say to CISBA is to keep fighting , and watch what goes on after the high end business open and make sure that all CIAA rules are followed and enforced , if not go public with it . Remember time is longer than rope.
What a f**king shame. But when they make this country where there is no middle class then everyone will see what will happen, Jamaica will be a paradise when it comes to crime. And yes we have ppm again at the helm, Lord only you can save us so I beg your presence in every way.
But Cayman has a massive middle class.
I am willing to bet that the selection at the airport will be the same as usual, you can either buy rum, rum cakes, perfume or a piece of jewelry.
The same people who benefit, by keeping others out…will be the same people to own the businesses there.
The same people who coincidentally sit on the airport authority board.
So you think someone on the board with a business interest somehow rigged this so they could pay a 20% concession fee? Brilliant! LMAO.
Welcome to the real world. Why do you think the big four win all the bids for consulting work? Just responding to an RFP is enough to put a small company out of business.
Not really the best “headline”. The Airport is not ‘pushing out’ small businesses, but rather ensuring that anyone who bids to open a business in the new expanded terminal, CAN complete a fit-out of the space, WILL complete a fit-out that meets the standard desired of the customer (the Airport Authority), PROVE that the proposed business owner is financially stable (bank statement requirement), PROVIDE evidence of a staffing compliment that is able to serve 550K+ passengers in an efficient way etc…Oh, and actually provide a service that is desired by the paying passenger. The old adage of “if you can’t afford to be in business, maybe you shouldn’t be in business”. It may seem like a harsh statement, but the Airport Authority is spending 60 million dollars on this project, and they are doing so without getting a loan or a subsidy from Central Govt, so kudos to them. I am a a far too frequent traveler, and the efforts being exhausted are greatly needed. Remember all the “small businesses” that were given opportunities to complete construction projects for CI Gov, and the only companies that actually got the job completed were the likes of McAlpine & Arch/Godfrey? They aren’t “small’, but rather proven entities to see a project through to the end. We cannot have an amazing new terminal with all the bells and whistles, offering very little to the travelers (the people actually paying the bill).
That is all well and good but you have missed the point. This approach is taking a sledge hammer to drive a nail is what I am hearing along with the 20% for rent. Let’s see how many of the big companies actually agree to these terms and whether or not they are local. I would bet that they will get very few submissions and they will have to revamp the RFP.
Whoever thought a business could pay 20% of revenue for rent does not understand doing business in Cayman. Best possible scenario for a well run business is 5-10% bottom line profits. Guess what happens when you take 20% off the top?
Serving the passengers efficiently is not only offering them liquor. How nice it is that the small businesses provide such a service such as phone cards, pain killers, etc etc. A lot of people don’t have no experience in Airport sales you need to shut up your mouths. Tourists buy while vacationing on the Island not when they reach the Airport. Its just the little last minute souvenir that they purchase and of course liquor. I just wish that Caymanians would get over this crab mentality and support one another. why do you have to have an Airport Board if you are going to bring in Consultants or that is to save face? One thing for sure two positions will be needed to keep record of the daily sales and for sure they wont be filled by Caymanians either. Did the Board get a chance in the decision making or they were sleeping during meetings, or they just didn’t care about their little small Caymanian?
Bottom line is…
This is really not such a great opportunity. Not sure where the $3000 number comes from. I would not expect the cost of responding to be much less than $20,000. To provide ALL of your proprietary systems, handbooks, historical sales numbers, let alone detail forecasts, labour plans, and concept outline (which alone should not exceed 20 pages) architectural drawings… Maybe the $3000 is just to upload your documents to the web portal.
And who is the selection committee and what experience do they have in such things?
Oh and you are responsible to apply for all permits related to construction. I can’t wait to see a successful bidder rolling into planning with a permit application being told the space is not zoned for whatever they plan to do and need to make a change of use application and a mailing (it is possible).
So you win. You are provided three concrete walls (you have to pay for the front wall) and do a full build out, in a limited amount of time, in a secured area. “hey boss, i misplace my sledge hammer” LOCKDOWN THE AIRPORT!
And that percentage rent… Yes it is low, but you have to commit to a minimum. If the storage is $65 a foot… Could it be any less than that?
All this for a compressed couple of hours of people in the morning, and a few hours midday.
500,000 visits a year. Manley is 1,500,000 and Montego Bay 3,500,000.
We have three excellent local companies in Jacques Scott, Blackbeards, Tortuga that do an outstanding job and that should return to sell the Duty Free liquor. I would be very disappointed if an outside company beat them.
For retail, tell me a there are better companies in the region than Kirk Freeport or Island Companies…
Now the food and beverage… Bless whoever takes that on. A sit down full service restaurant serving breakfast lunch and dinner? A nightmare. Whatever reason someone does step up, it will not be to get a return on investment.
Good luck!
The time and energy to complete the RFP and then no guarantee you will be successful, a communist way of collecting rent, open book accounting so the rest of Cayman can steal your business ideas makes me think I should pass. They will take your ideas not give you the space and pass your ideas on to their cousin. Think it won’t happen?
It doesn’t look like “rent” will be calculated on a fixed sq footage basis, rather on a backend formula of what they think vendors can afford based on their business’s projected P&L (which applicants must reveal). Given the opaqueness of the selection criteria and method, we should expect all the prime spots to be awarded to Ministry of Tourism relatives and close cronies at sweetheart rates to avoid vacant un-leased space. Lots of window-dressing, and the appearance of a legitimate process, but nothing has really changed at the important committee levels in Cayman (unfortunately).
1.18pm Rubbish , Nothing but a hater. Why do you throw out such evil thoughts about Mr Kirkconnell without one shred of evidence. Hater.
Same old PPM. I wonder if they will allow Jon Jon to continue his business there??
But of course Silly, don’t you know that they only look out for their own interests?
The CIAA decided how to structure the bid process, not the PPM. That is the CIAA’s job as the Airports Authority Law requires it to provide for the needs of airport users and make decisions about how to do that.
Yea right ! One call from a certain politician and voiiillaaa
It’s the PPM government, big business only. You all really expect any different? No help for the small man.
and the other government didn’t do the same? None of the big parties are different. All cater to big business eventually. Money talks unfortunately.
If you can’t afford $3000 to go after a long term lease at the airport, then you should do your business somewhere else. The rents are based on gross sales for the obvious reason that the risk of losing money should fall on the business, not the airport. The concssions at the airport hav been a joke and I will be glad of improvements.
With 20% off top line revenue, not many companies will be able to sustain that unless they sky rocket the prices. Then everyone loses except the airport.
Typical PPM response. Just like Wayne and Marco telling people who are losing homes because they cannot find work to manage their money better
Having recently traveled through a Caribbean and an American airport I would like to appeal for some ‘smaller’ businesses mixed in to ours. The ‘quirky’ stores in the Caribbean airport lent an ‘exotic’ flavour to what is otherwise an internationally interchangeable departure experience. (Which is a good thing. You can navigate ‘any’ airport because of these similarities.) While the American airport vendors felt like a shopping mall. (So perhaps a bit of national flavor after all.) Since we’re a bit of both, lets have a bit of both when selecting the airport stores and food vendors.
Have you actually been to the OR departure lounge? The food, beverages and shopping suck by and large. That is what the small businesses have provided us. I don’t want my airport experience to be quirky and exotic, air travel is bad enough as it is. An airport is just a place to wait for your flight. Who sends postcards home about the wonderful airport they visited? Leave the quirky and exotic out at the taxi stand.
Yes, I exited through ORIA on that trip. And go through it a few times a year. And I stand by what I said. A mixture of store ‘sizes’ is more attractive. For every Brookstone there should be a Jim’s Junk (not a real store but you get the idea). An airport is just a place you’re stuck waiting on your flight, so why not make it as welcoming to everyone as possible?
Yeah, we want awesome “experiences” at the airport so because that’s why visitors come to the island right? What about leaving it up to the local small businesses who have charm, and try harder than most because they have a family to feed?
Given how depressing the offering of retail outlets has been, excluding currently operating businesses could only be a good thing.
All of them… except perhaps Tortuga who do show some imagination.
The outlets certainly have not improved over the years. Why would you when you expect every year that the place will have a big renovation and your investment will disappear?
The new requirement is to have all new equipment, displays etc and also to do a renovation 5 years into the term.
We already have the name of being an over priced Island . Just imagine if the prices have to be raised at the Airport. Our Boards need to have good thinking business people who don’t accept anything that is thrown at them.