A major local-based hospitality group is crying foul at business dealings with the Queenstown Airport Corporation (QAC).
Large bar and restaurant operator Good Group has had to dismantle its airport terminal bar Bing Bong because QAC needs the area to relocate domestic passenger arrivals.
Good Group, in exchange, has been allowed to extend its lease on the adjoining cafe.
The lease, which expired in August, has been extended till April, though the rent’s doubled.
Separately, QAC has invited several parties, including Good Group, to tender for the lease of a redesigned cafe, including a bar, from pre-winter next year.
The redesign is part of QAC’s plan to improve the terminal’s retail operation – it’s also putting in a new food and beverage outlet by the terminal entrance, which will be let to a separate operator.
QAC boss Scott Paterson says the Airport Authorities Act allows the cancellation of terminal leases like the Bing Bong one when an area’s required for airport use.
“We came to a commercial arrangement where the bar was removed and the cafe lease extended which gives [Good Group] the winter and all the summer to trade.”
Good Group boss Russell Gray says his company was left with no choice: “It was ‘take your bar, we’ll extend your cafe lease through to April next year but we’re doubling your rent at the same time’.”
Gray is unhappy that QAC has put the new cafe/bar lease up for tender.
“We were in negotiation with them on a good faith basis to work together to put in the redesigned cafe and bar.
“We worked with their designers and we provided significant input so we were surprised they moved away from just us to go to the market.”
Paterson says there was no obligation in the “commercial arrangement” to extend Good Group’s cafe lease beyond April.
“We needed to test the market,” Paterson says.
Gray: “We’re just disappointed the goal-posts seem to have changed many times.”
Gray says the airport’s “draconian” lease clauses make it very difficult for businesses to invest in retail outlets when there’s no certainty of tenure.
“At this stage, we have no certainty past April next year, which is not that far away.
“We deal with a multitude of different landlords and we have good strong relationships built up with them over many years, but I have to say the one with the QAC is very frustrating and very disappointing.”
Referring to Auckland International Airport’s controversial buy-up of 24.99 per cent of Queenstown Airport in 2010, Gray adds: “It actually feels like we’re dealing with Auckland Airport, not QAC – that’s exactly what we were all probably pretty concerned about, from day one.”