Bethesda concessions company HMSHost is reviewing its options after losing a court battle over its failed state bid to redevelop and continue operating two travel plazas on Interstate 95 north of Baltimore.
Baltimore City Circuit Judge Audrey Carrion last week dismissed the company’s lawsuit against the Maryland Transportation Authority, Areas USA of Miami and other parties. HMSHost filed the suit in March after the state Board of Public Works awarded a multimillion-dollar, 35-year contract to Areas to redevelop and operate the travel plazas in a public-private partnership.
HMSHost had operated the plazas since 1987. Areas took over operations of the plazas in September and is moving forward with $56 million renovation projects at Maryland House in Harford County and Chesapeake House in Cecil County.
“We are still evaluating our options,” Sarah Cody, a spokeswoman for HMSHost, said Wednesday.
In a hearing on the matter in Rockville this year, John Wolf, an attorney representing HMSHost, argued that the state did not allow HMSHost the opportunity to improve its original bid, while allowing Areas to do so. State attorneys denied that was the case.
Areas, state slated to complete renovations in 2014
The two travel plazas are among the busiest in the nation, drawing a combined 5 million visitors annually, with food and beverage sales running from $30 million to $35 million a year, according to HMSHost.
The state is retaining ownership and oversight of the plazas, and officials shut down Maryland House in September for renovations, which are slated to be completed by early 2014. Restaurants planned there include Phillips Seafood and Jerry’s Subs & Pizza.
Chesapeake House will remain open until Maryland House reopens, then will be closed for renovations and reopen by the fall of 2014, officials said. Restaurants to open there include Earl of Sandwich, Pizza Hut and Caribou Coffee.
Besides investing $56 million to renovate the facilities, Areas, a subsidiary of Areas S.A. of Barcelona, Spain, which operates in more than 70 airports worldwide, plans to spend $44 million to $48 million in future capital improvements. Areas will keep at least 85 percent of gross sales at the plazas, while the state receives revenue for 35 years of as much as $488 million, under the agreement.
“We’re bringing 21st century customer-service facilities to Maryland’s citizens and visitors at no cost to the state,” Harold M. Bartlett, executive secretary of the Maryland Transportation Authority, said in a statement.
HMSHost attorneys have claimed in court documents that Areas’ forecast of total rent paid was based on an “unachievable sales forecast.” Areas’ first-year rent of $8 million would require sales of $40 million at Chesapeake House alone, plus corresponding fuel sales, which would be 330 percent more than what that plaza generated when HMSHost operated it, attorneys argued.
Among companies involved in the travel plaza work are Clark Construction Group of Bethesda, Cain Contracting of Columbia and Cagley & Associates of Rockville. The buildings are designed to be certified under the U.S. Green Building Council’s Leadership in Energy and Environmental Design program and offer free wi-fi service.
Second time HMSHost loses major contract in Maryland
In seeing the toll plaza contract slip away, HMSHost lost a major vote by the Board of Public Works for the second time in the past decade. Comptroller Peter V.R. Franchot (D) was the lone board member to back the company, while Gov. Martin O'Malley (D) and Treasurer Nancy K. Kopp (D) supported the Areas bid.
In 2004, the three-member board voted to award a multimillion-dollar, 12-year contract to manage concessions at Baltimore-Washington International Thurgood Marshall Airport to the former BAA USA of Pittsburgh. Essentially, state officials wrote out HMSHost by seeking bids only from contractors such as BAA that used a different concessions model from the one HMSHost employed. HMSHost did not submit a bid for the BWI contract in 2004 but asked the state to rewrite the proposal to allow bids from companies using its model, which Maryland officials did not do.
Kopp was the lone member to oppose that deal, which was backed by then-Gov. Robert L. Ehrlich Jr. (R) and William Donald Schaefer (D), who was then comptroller. Two years ago, BAA USA was bought by New York investment company Prospect Capital Corp. and its name changed to Airmall USA.
HMSHost had managed food services at BWI for about three decades when BAA took over, and it still operates a few sites at the airport, including a Starbucks location, under an agreement with Airmall. Concessions sales per passenger at BWI increased by 61 percent from $5.47 in 2003 to $8.81 in 2010, and the number of concessions jobs there about tripled to some 1,500 in that time, according to Airmall.
HMSHost — whose parent company, Autogrill S.p.A. of Italy, bought the former Host Marriott Services in 1999 — has annual sales of about $2.7 billion. It employs more than 34,000 people worldwide, with about 400 at its Bethesda headquarters. The company operates some 100 travel plazas in North America, including the Delaware Welcome and Travel Center along Interstate 95 and in Pennsylvania, New Jersey and West Virginia.
The business also operates concessions at more than 100 airports worldwide, including BWI, Reagan National Airport and Dulles (Va.) International Airport. The company also runs restaurants in some mall food courts, including Arundel Mills in Hanover.