Staff recommends that the City Council approve the three (3) Automobile Rental Concession Agreements with the three concessionaires submitting successful proposals for the term that begins July 1, 2022, and ends on June 30, 2027.
 

The current Automobile Rental Concession Agreements to operate rental car concessions at the Billings Logan International Airport expire June 30, 2022.  The Airport has five rental car concession counters available in the Terminal Building, that are currently leased by (1) Overland West, Inc., DBA Hertz Rent a Car, (2)  Enterprise RAC Company of Montana/Wyoming, LLC DBA Alamo Rent A Car & National Car Rental, (3) Enterprise RAC Company of Montana/Wyoming, LLC DBA Enterprise Rent-A-Car, (4) Larson Enterprises, Inc. DBA  Avis Rent A Car and Blackfoot Rentals, Inc. DBA Budget Rent A Car, and (5) Overland West, Inc. DBA as Dollar Rent-A-Car and Thrifty Car Rental.  Additionally, the Car Rentals also, as part of this Agreement, lease operating space at the Airport's Quick Turn Around (QTA) facility (car wash and detail bays) and parking space in front of the Terminal and at the QTA.

A Notice of Request for Proposals (RFP) was advertised in the Yellowstone County News on April 29 and May 6, 2022, and also on both the City website and the Airport website.  The deadline for RFP responses was May 27th.  Three proposals were received from the following companies to operate rental car concessions in the Airport Terminal Building for the next five years:

Proposer	Five-Year MAG
Overland West, Inc. dba Hertz Rent-A-Car, Dollar Rent-A-Car, and Thrifty Car Rental	$2,411,050
Enterprise RAC Company of Montana/Wyoming, LLC dba Enterprise Rent-A-Car, Alamo Rent A Car, and National Car Rental	$4,000,180
Larson Enterprises, Inc. dba Avis Rent A Car, and Blackfoot Rentals, Inc. dba Budget Rent A Car	$1,900,000

The three (3) proposers submitting proposals for the new Automobile Rental Concessions are the same rental car operators and will provide the same seven (7) car rental brands that presently operate at the Airport.  However, several ownership consolidations have taken place since the start of the expiring contract, and as a result several of the rental car operators have opted to consolidate all of their brands at a single counter this time rather than operate brands at separate counters and have therefore submitted a single proposal.  This consolidation does result in two vacant car rental counters.  The Airport will begin an evaluation of how to best use this space in the future.

City Council may:

• Approve Automobile Rental Concession Agreements with the three companies submitting successful responses to the RFP; or,
• Not Approve Automobile Rental Concession Agreements with the three companies submitting responses to the RFP, and direct Staff on how to proceed.

With the acceptance and approval of the recommended Automobile Rental Concession Agreements, the City will receive the greater of 10% of the actual Car Rental Gross Revenues each year or the Minimum Annual Guarantee (MAG) as provided by each car rental as part of the RFP response.  The combined MAGs provide a guaranteed revenue stream of $8,311,230 over the next five-year period for the Airport, along with the space rentals.  The new MAG amounts total $2,553,720 more than the previous agreement's total five-year MAG amount, providing a greater level of financial security to the Airport.
 
The total revenues provided to the Airport for FY 22 are projected to be over $2,200,000.  Additionally, the operating spaces used by the car rentals add another $273,000 in FY 22 rental revenues.  These spaces, including the Terminal Building ticket counter space rental, the parking space rental, and the QTA Car Wash Facility ground space rental will be adjusted annually for inflation by the average of the monthly percentage increases of the previous calendar year, as determined by the Department of Labor Consumer Price Index for All Urban Consumers (CPI-U), published monthly by the Bureau of Labor Statistics.