FLYING THE FRIENDLY SKIES
OF AIRPORT RETAIL
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Waiting in an airport has never been anyone’s idea of fun. But things are changing. As more travellers choose flying as their transportation mode, traveller types have also shifted dramatically. Airports are no longer filled with harried businessmen rushing to phones and racing for flight connections. Today, more women travel on business and more families opt for a plane ride rather than trying to reenact a Chevy Chase-esque “Family Vacation.” And with changes in airport security, passengers are now required to arrive early, consequently finding themselves with time on their hands. In a sense, they are a captive audience — and one with real spending power as well. Airport shoppers are being recognized as a lucrative market and airport retailing is evolving to meet that market.
| Gone are the days when a few duty-free shops and
newsstands dominated the small amount of commercial space provided in airports. Serious
efforts are being made to design new airport facilities around the goal of incorporating
substantial amounts of retail space. And efforts just as intense are being undertaken by
retailers to tenant that space. Everyone from developers, to retailers, to city officials
are excited about this new trend for a variety of reasons — and most of them have to
do with that universally accepted endeavor — making money. Developers and
retailers are realizing that retail sales at airports bring in an average of $1,137 per
sq.ft. This is due to the unique market that airport shoppers provide, ranging from guilty parents who forgot to buy something for their kids to vacationers who want to bring home souvenirs of their trips. |
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City officials are realizing that many time-strapped
travelers’ only glimpse of a host city is the airport that they visit, giving the
airports undivided control of the perception of those cities. An impressive display of
high-end local and national retailers makes a great impression, and more often than not,
results in substantial contributions to the local economy.
Host Marriott Services Corporation, based in Bethesda, Maryland, claims it was the first
to introduce retail brands into airport environments in the early 1980s. Today, it
won’t be the last company to take advantage of the retail opportunities available in
modern airports, but it is certainly a prime example of a company that is focusing its
energies on those opportunities. One of Host Marriott’s primary growth strategies is
expansion of operations in international airports. It currently conducts operations at
more than 70 airports, including most of the top 20 U.S. airports.
The company operates branded retail facilities under licensing or franchising arrangements
with brand owners, offering more than 100 international, regional and proprietary brands.
Host Marriott developed an airport consumer database in order to conduct surveys, trend
analysis and industry-wide research. Using constantly updated data, it creates a dynamic
mix of its concepts based on individual airport needs. Bath & Body Works, Lands’
End, Sunglass Hut, Tie Rack, Starbucks Coffee, California Pizza Kitchen, Burger King, Taco
Bell, The Body Shop, Bally, Wilsons The Leather Experts, Cinnabon, Cool Planet, Johnny
Rockets, The Museum Company, Chili’s, and The Cheesecake Factory Bakery Cafe are
examples of the brand power that Host Marriott brings to travel venues.
Recent agreements with dick clark restaurants, inc., FOX Sports and DIRECTV, Inc. show
Host Marriott’s constant attention to keeping on the cutting edge of airport
operations. The agreement with dick clark, announced in September, will result in Host
Marriott licensing, developing and operating an adaptation of Dick Clark’s American
Bandstand Grill® within yet-to-be-announced airport locations, although the first is
expected at Indianapolis International Airport. The new units are planned to occupy 2,000
sq.ft. and will be called “Dick Clark’s Bandstand — Food, Spirits &
Fun.”
Host Marriott partnered with DIRECTV to provide exclusive programming for FOX Sports Sky
Box Bar and Grills, a new concept developed under an agreement between Host Marriott and
FOX Sports. The first location of the bar and grill, designed to cater to the seemingly
insatiable sports appetite of air-traveling fans, recently opened at Chicago O’Hare
International Airport. It will now offer customers a dining experience enhanced with
satellite television entertainment from DIRECTV. The O’Hare location is the first of
six scheduled to open this year that will feature the new programming. More than a dozen
FOX Sports Sky Box airport locations are projected to open by 2002.
At O’Hare alone, Host Marriott invested more than $15 million into food and beverage
operations and occupies more than 42,000 sq.ft. of space throughout the airport’s
three domestic terminals. It recently entered into a ten-year concession agreement, which
replaces its prior food and beverage concession agreement dating back to 1961. The company
employs approximately 1,200 people from the Chicago area. In late June, Host Marriott
opened the Wolfgang Puck Airport Cafe in the American terminal and Wolfgang Puck Express
in the United terminal. Along with the two new restaurants, Host Marriott operations at
O’Hare include Starbucks Coffee, TCBY/Juice Works, Panda Express, Chili’s Bar
& Bites, and Cinnabon. These national name brands are coupled with local Chicago
favorites including Corner Bakery, Eli’s Cheesecakes, Gino’s East, Connie’s
and Reggio’s Pizza. Host Marriott also recently opened the Skybird Business Center
featuring Mail Boxes, Etc. The new center offers conference room facilities to busy
travelers and an office away from home for the traveling professional.
Host Marriott offers just one example of retail operations that are expanding into airport
markets. But the expansion is not being fueled by retailers alone. Airports themselves,
often aided by their surrounding municipalities, are spending millions of dollars to beef
up retail space.
On the development end, one example is the Detroit Metropolitan Wayne County
Airport’s new Midfield Terminal, which is under development and scheduled to open in
the fall of 2001. The project is part of a much larger 2-million-sq.ft. public works
project.
This $786-million “Midfield Airport Mall” will provide 125,000 sq.ft. of
innovative state-of-the-art space for local and national retailers. Plans call for a
bistro/restaurant/bar surrounded by 77,000 sq.ft. of food and beverage concessions
comprised of 38 restaurant concepts; 34,000 sq.ft. of news, gift and specialty retail
comprised of 38 news/retail concepts; 6,000 sq.ft. of space for duty-free retailing; and
8,000 sq.ft. for services and amenities. Hundreds of bids from various retailers and
restaurateurs were submitted to concessions manager Colleen Pobur before the cut-off date
of October 1, 1999.
Officials say the airport’s retail component was an integral part of overall design
plans. By locating the 57,000-sq.ft. bulk of the concession facilities in the central link
area of the new Midfield terminal, designers hoped to ensure that 70 percent of enplaning
passengers will pass by those retailers. This traffic plan is enhanced by easily
accessible storage areas and service corridors, as well as the provision of 74 jet
aircraft gates and 25 commuter aircraft gates. There will also an easy-access overhead
tram that will further facilitate travel throughout the terminal. With travelers spending
an hour and a half, on average, at the airport, these efforts to maximize convenience and
“down time” are expected to translate into significant sales figures from the
restaurants and shops planned for the terminal.
Studies indicate that the typical Detroit passenger is 25-54 years old. The data also
shows that 65 percent of passengers are leisure travelers with an above-national-average
income. “Leisure travelers generally arrive earlier at the airport and therefore have
more time to shop and dine,” says Wayne County Executive Ed McNamara. “With more
than double the square footage of concession space at the new terminal, we plan on filling
it with attractive stores and specialty shops offering unique products at good
prices.”
Another example of airport retail development efforts is taking place at Portland
International Airport, where a four-year, $400-million expansion project is underway, with
$11.8 million set aside for central terminal renovations that will include the addition of
27 stores. In the next five years the budget for concessions development will have
exceeded $20 million. Future plans include the addition of a two-story retail atrium that
will expand from the airport’s existing Oregon Market.
However, airport officials say they are being careful in their expansion plans. Although
studies have shown that the existence of high-end, highly recognizable retailers helps
travelers to forget that they are in an airport, many airport officials’ goal is to
ensure that visitors don’t forget where they are. “We are striving to provide a
true reflection of the Northwest,” says Jeanne Raikoglo, senior manager of
concessions development for Portland International. She feels that local shops appeal to
visitors due to their uniqueness and area residents enjoy the familiarity. To ensure that
it achieves a strong local base in its retail concessions tenant mix, the airport is going
so far as to sponsor seminars to show small local businesses how to assemble proposals.
Portland International’s specialty retail program was named best in the nation by
Airports Council International in 1999, with Pittsburgh International close behind. The
average enplaning passenger spends $7.11 at Portland, putting it in the top five airports
in the nation for passenger spending. Since its last expansion in 1994, airport revenues
have increased 70 percent, and officials hope that the current expansion will see an even
larger increase.
At Los Angeles International Airport (LAX), a $24-million concessions expansion plan has
helped to more than double the airport’s food and beverage revenues since 1993.
However, LAX also houses a local concept that offers the best of both national and local
retailing, attracting almost as much consistent local support as it does from the rest of
the world. The extremely popular restaurant and bar “Encounter” is located in
the flying saucer-like Themes Building of LAX. Besides serving great food, it is a marvel
of space-age futuristic design. The ultra-glitzy lounge’s highly stylized interior
has made its bar a very attractive destination for a young, hip, local crowd and often
celebrities as well. The concept was created by CA1, a Buffalo, New York company that
specializes in the development of innovative airport retail, the creation of proprietary
brands, and the strategic positioning of national brands. For the high-tech concept, CA1
brought in designers from Walt Disney Imagineering, guns big enough to indicate to anyone
that the airport market is becoming a serious arena.
Airport retailing has definitely taken off. And it seems that everyone, from retailers to
airports to travellers, is along for the ride.
For more information:
-Amy Morgan, 301-380-3733, Brad Siedner, 301-380-6395, Host Marriott Services Corporation,
6600 Rockledge Drive, Bethesda, MD 20817.
-Colleen Pobur, Director of Concessions, Detroit Metropolitan Wayne County Airport, L.C.
Smith Terminal Mezzanine, Detroit, MI 48242; 734-247-7280, Fax (734) 942-3793;
www.metroairport.com.
-Mary Maxwell, Port of Portland, 7000 NE Airport Way, Portland, OR 97218; 503- 460-4069.
-CA One Sevices, 438 Main Street, Buffalo, New York 14202; 716-858-5000, Fax (716)
858-5525.