Houston City Council awards new Hobby Airport concession contract, ending Pappas’ reign

Houston-based Pappas Restaurants will no longer operate Hobby Airport after 20 years there. The Houston City Council on Wednesday voted to award a new concession contract to a joint venture group led by a Spanish company, ending a years-long bidding process that drew criticism from the outgoing operator.

A 10-year, $470 million contract was awarded to a group led by Areas, a Spanish-headquartered company that has concessions at nine US airports and 89 airports worldwide. The city council voted 11 to 6 to approve the new agreement after weeks of delays and debate.

During several public meetings, Pappas management and some Houston residents spoke out against the new contract, arguing that the local company should have priority over the foreign operator. The local restaurant group, which runs popular eateries like Pappasito’s Cantina and Pappadeaux Seafood Kitchen, even questioned the city’s contracting process and began online petition who has more than 50,000 signatures.

The City said the Rayon-led group, which includes some local partners, scored higher in the bidding process and also predicts a greater financial return for the city than Pappas’s group, 4 Hobby Families. The Areas-led group pledged to provide the city with 22.2% of concession sales revenue, while the Pappas-led group offered 15.5%.

“Papas decided not to rise,” Houston Mayor Sylvester Turner said. “In fact, what Pappas is offering the city for the next 10 to 20 years is less than what they are giving the city right now – right now in their offer they are giving the city less than they are currently paying the city. ”

Turner said bidders were asked to make the best and final bid in terms of revenue, and Pappas chose not to increase its projected revenue for the city. He said Areas’ offer was a $20 million difference over Pappas’ offer over the next 10 years. Turner said he did not understand what caused the issue with this particular concession contract process, with the city council having previously unanimously approved three.

“This is a competitive bidding process. This is not a popularity contest,” Turner said. “It’s not about ‘I like x and that’s why I want x’, because if that’s the case, then we need to change the whole system.”

IN January, the city council has entered into a separate 10-year concession contract with the LaTrelle management corporation, which is also part of the 4 Families group, which includes Pappas. Areas are expected to feature local concepts such as Killen’s Barbecue, SpindleTap Brewery and Clutch City Coffee, as well as national brands such as LongHorn Steakhouse.

“Today we are very disappointed with the decision of the city of Houston,” said Robert Riedl, Pappas chief operating officer. “We believe that Houstonians deserve a fair and transparent purchasing process, and that didn’t happen.”

Riedl said Pappas will offer each of its current Hobby Airport employees the same compensation, benefit package and seniority at one of its street locations.

At-Large Council member Michael Kubosh, who voted against the new contract, also said there were some shortcomings in the procurement process. Over the past few years, the city has twice canceled and restarted the bidding process for this concession contract.

“I just didn’t feel like the process was fair, I didn’t feel like it was clean, I felt like those three trades just looked sloppy and I’ve talked about that before,” Kubosh said. “I just don’t feel like we’re getting the most benefit here unless the board rejects it and we want the best value for the flyers and for the city of Houston flyers and I just believe we’re going to make the mistake of doing that unless we will vote for this contract.”

District I Councilman Robert Gallegos, another nay voter who represents the Hobby District, has been outspoken about keeping Houston restaurants at the airport.

“We have just become a 5-star airport, and colleagues, are you willing to take a chance?” Gallegos said. “Are you really willing to risk $5.8 billion in economic damage to our city and take the risk when we find out what Pappas and Pappas restaurants did at Hobby Airport?”

regions will start their transition by the end of the year, and all 10 partner restaurants it provides are expected to be operational by November 2024.