Phoenix Adds Rent Relief Rules To Sky Harbor Airport Businesses

By Christina Estes
Published: Monday, December 21, 2020 - 5:05am
Updated: Monday, December 21, 2020 - 7:37am

persona ordering at counter
Christina Estes/KJZZ
Blue Mesa Tacos was the only restaurant open pre-security at Terminal 4 on September 4, 2020.

Rent relief for restaurants and retail shops at Phoenix Sky Harbor International Airport will continue through next year. But the offer comes with conditions.

Since April, concessionaires have been paying rent based on a percentage of sales only, generally 13% to 15%. The offer could continue through December 2021 if passenger traffic remains below 80% of last year’s levels. Councilwoman Laura Pastor added conditions to the deal during last week’s council meeting. They include requiring businesses that recall employees to provide a reasonable period for them to return to work. 

"A reasonable period should be at least 48 hours to respond to the recall offer and at least 14 days to return to work to account for the CDC-published guideline for quarantine,” she said.

The council also required employers to offer health insurance immediately upon recalling workers and that employees remain eligible for recall for as long as the pandemic is expected to affect passenger traffic.

“Based on data from Moody’s, and considering the peaks during the holidays, it is reasonable to expect that recovery will not occur before December 2022, and therefore the commitment to recall employees must extend to December 2022,” Pastor said.

The Aviation Department estimates it will lose about $10 million in rent from terminal concessionaires in 2021. Earlier this year, Sky Harbor estimated it would lose $20 million between April and December 2020.

As of Dec. 7, the Aviation Department reported 47% of businesses in Terminals 3 and 4 remain closed.

The main food and beverage operators at Sky Harbor are HMS Host, which has 24 outlets, and SSP America, which has 31 outlets. Both companies have global operations and partner with local brands at Sky Harbor. 

The airport has eight prime operators, businesses that are contracted with the city to provide services in certain areas like food and beverage or retail. The prime operators then have contracts with subcontractors. 

Sky Harbor’s prime operators include: HMS Host, SSP America, Stellar Retail, Paradies Lagardere, CASA Unlimited, Hudson Group, InMotion Entertainment and XpressSpa.

Rent relief based on a percentage of sales only will continue through 2021 unless:

  1. Passenger enplanements reach 70% of 2019 levels for two straight months. Then concessionaires will pay an extra 2% of rent.
  2. Passenger enplanements reach 80% of 2019 levels. Then, concessionaires will pay a minimum annual guarantee based on contracts with the city or percent rent, whichever is greater.