concession management methodology 042810 -- final for web
TRANSCRIPT
Ft. Lauderdale-Hollywood
International Airport
May, 2010
1
To seek Board direction regarding
the concession management and
leasing methodology best suited to
improving customer service and
growing revenue at Fort
Lauderdale-Hollywood International
Airport (FLL)
2
Presented current concession contract situation
Suggested the following revisions:◦ Food & Beverage:
CA-One: Non-exclusive agreement for Terminals 3 & 4
New competitive solicitation for Terminals 1 &2
◦ News & Gift:
Paradies: Non-exclusive agreement for Terminals 3 & 4
AMS: Non-exclusive agreement for Terminals 1 & 2
Need Policy direction to move forward
3
Consultant engaged in February 2010◦ Completing analysis of existing conditions & market insight
study◦ Concession redevelopment study Analyzing concession demand for space (store and support) Prepare sales and revenue projections Study covers all types of shop-based concessions (food service,
news/gift, specialty retail, duty-free retail)◦ On-call services may include, but are not limited to: Leasing guidelines/contract term recommendations Privilege fees, rental structure, and capital investment
requirements◦ General advisory services may include, but are not limited to: Planning and analysis in support of relocation of security
checkpoints or terminal redevelopment Analysis of costs, benefits and means for common concession
goods receiving, screening and delivery.
4
Food and Beverage:◦ CA-One – Terminals 1-4: Expires December 31,
2013
News & Gift:◦ Paradies Fort Lauderdale – Terminal 1, Concourse B:
Expires December 31, 2011
◦ AMS – Terminal 1, Concourse C & Terminal 2: Expires December 31, 2013
◦ Paradies Broward – Terminals 3 & 4: Expires December 31, 2013
Duty Free:◦ Broward Duty Free: Expires December 31, 2013
5
November 2010
Construction Documents with
Commercial Locations in
Terminals 3 and 4 Completed
by BCAD
Mid 2011 -
Early 2012
Interim
Concessions
Required During
Construction
Phase
Mid 2013
Opening of new
permanent
Terminal 3 and
4 concessions
December 31,
2013
Current scheduled
expiration of food
service, retail and
duty free retail leases
Investment
Required
6
Existing food & beverage concession agreement is exclusive and prevents any new food & beverage operator from serving the terminal complex prior to December 31, 2013
CA-One, Paradies, and Broward Duty Free unlikely to open new locations in Terminals 3 or 4 without extension due to investment required
Airport is required to reimburse existing food and beverage concessionaire for unamortized investment -this option is very expensive for the Airport◦ Substantial investment in new facilities beyond the initial
investment was not contemplated in retail or duty-free retail contracts
7
Existing agreement does not allow for a new food service concessionaire to open locations before January 1, 2014 due to exclusivity language. With no extension, the County is left with two options:◦ Require existing concessionaire to build new locations, but the
County is compelled to buy out the investment; or
◦ Do not have any food service concessions in newly built-out areas (or areas that are substantially changed) until at least 1/1/14.
An outgoing concessionaire may be more interested in cutting costs than growing sales
An outgoing concessionaire is unlikely to invest in interim locations during construction
8
Extend CA-One for Terminals 3 & 4 only◦ Require a new concession plan (being developed with
SH&E)◦ Allows Airport to ensure investment made in Terminals 3
& 4◦ Include best practice terms & conditions, including
performance-based language and “green” design
Remove all CA-One Exclusivity◦ Competition encourages better performance◦ Allow News & Gift operators to sell bottled beverages
Issue a Competitive Solicitation for Terminals 1 & 2 in late 2010◦ Contract effective 1/1/2012
9
Extend AMS, Paradies, and Broward Duty Free as of January 1, 2012◦ AMS in Terminals 1 & 2
◦ Paradies in Terminals 3 & 4
◦ Allows Airport to ensure investment made in all terminals and accommodates varying development schedules
◦ Include best practice terms & conditions, including performance-based language and “green” design
◦ Contracts are non-exclusive
Allows flexibility for new product lines not carried by existing vendors
10
Request policy direction to address:◦ Food & Beverage:
CA-One: Non-exclusive agreement for Terminals 3 & 4
New competitive solicitation for Terminals 1 & 2 in late 2010
◦ News & Gift:
Paradies: Non-exclusive agreement for Terminals 3 & 4
AMS: Non-exclusive agreement for Terminals 1 & 2
◦ Duty Free
Broward Duty Free: Non-exclusive agreement in all Terminals with international departures
11