Airport Experience® News - 20 Years of the AX Conference

JANUARY/FEBRUARY 2024 / V22 N252

A 20-Year Retrospective Issue celebrating the 20th Anniversary of the Airport Experience Conference.

F&B & Retail Meet Shifting Traveler Demands

The ACDBE Program Evolves

Lounges, Services, Ramp Up Offerings

Design Reaches New Levels

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First-class restaurant experiences

Enjoy your (wine) flight

10-minute automated manicures*

Discover iconic local goods

Award-winning retail*

The Hybrid Experience ... Perfected.

Our unique expertise in delivering elevated restaurant and retail options allows travelers to enjoy a day of fine dining, entertainment, unique shopping and even a little pampering…without leaving the airport!

* Photo credit: J. David Buerk Photography

C ONGRATULATIONS ONGRATULATIONS

Kitchen Step @ EWR Kitchen Step @ EWR

Thank you for being an invaluable resource to the Airport Industry for the past 20 years. Thank you for being an invaluable resource to the Airport Industry for the past 20 years.

Ess-a-Bagel @ EWR Ess-a-Bagel @ EWR

PF Chang’s @ DCA PF Chang’s @ DCA

S ERVING THE W ORLD , O NE G UEST AT A T IME S ERVING THE ORLD , O NE G UEST AT A T IME

Wine Bar George @ MCO Wine Bar George @ MCO

WWW . MCA - AIRPORTS . COM 305-871-0559 WWW . MCA - AIRPORTS . COM 305-871-0559

Orlando Brewing @ MCO Orlando Brewing @ MCO

FEATURES

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16 Concessions Moves The local-versus-national brand debate,

pricing policy shifts, and focus on the traveler experience are a few of the changes examined in this look back at 20 years of airport concession evolution. 22 ACDBE Impact Various changes to rules surrounding the ACDBE program over the years have allowed it to survive and thrive, although many believe further tweaks are necessary. One looming issue is whether, given recent U.S. Supreme Court decisions, the program will face heightened scrutiny down the road. 26 Passenger Pampering For decades, limited services were available to travelers in airports, and lounges were once reserved for more well-heeled frequent travelers. But over the past two decades, more spas, nap and work stations and other services have gained traction in airports, and lounge numbers and access policies have evolved to meet growing demand. 30 Wowing Passengers Macro-events have influenced design of airport terminals and airport concessions over the past two decades, but equally impactful is the trend of creating a “sense of place,” as well as moves toward more upscale looks and finishes. 34 20 Years In Pictures The Airport Experience Conference is 20 years old this year. Flash back to some of the best moments in this photo timeline. 38 Excellence In Concessions Check out the finalists for the 2024 AX Awards. Winners will be announced at the Awards Gala, the closing event of the 2024 AX Conference.

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30

COLUMNS

5 Letter From The Editor 8 Data Check A Euromonitor International study,

43 Advertising Index 44 Before You Take Off

The old carpet at Portland International Airport was replaced in the mid-2010s, but by then the iconic and colorful flooring had taken on a life – both physical and virtual – of its own. The new terminal renovations is bringing a bit of the magic back.

commissioned by the U.S. Travel Association, suggests the U.S. is starting to trail behind in competition for global visitors 10 Latest Buzz Portland International Airport’s new terminal prioritizes sustainability and seeks to reflect Portland’s outdoorsy reputation. New concessions embody the airport’s hyper-local focus.

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AX NEWS JANUARY/FEBRUARY 2024

TEAM

Desiree Hanson Chief Commercial Officer Melissa Montes Vice President/Publisher Carol Ward

Editor-in-Chief Nicole Watson Business Development Manager

Andrew Tellijohn Senior Reporter Sally Kral Contributing Writer Sarah Beling Contributing Writer

Barbara McCarter Portfolio Manager Chad Wimmer Senior Editorial Art Director Rae Lynn Cooper Production Manager Amanda Gochee Vice President, Marketing Strategy Katy Welch Senior Marketing Manager Tristan Lueck Marketing Coordinator Amanda Martinez Marketing Coordinator

Airport Experience ® News Is a Division of CLARION Events Phone 561.257.1026 Fax 561.228.0882 To subscribe visit https://airportxnews.com/subscribe/ ISSN: 1948-4445 Russell Wilcox Executive Chairman Lisa Hannant Chief Executive Officer, Clarion Events Greg Topalian CEO, Clarion Events North America and Left Field Media Liz Irving President, Clarion Events North America Copyright © 2024 Airport Experience ® News, all rights reserved. Any reproduction of this magazine is strictly forbidden without prior permission from Airport Experience ® News.

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AX NEWS JANUARY/FEBRUARY 2024

JANUARY/FEBRUARY 2024

Dear Readers

JANUARY/FEBRUARY 2024 / V22 N252

Our loyal audience is accustomed to Airport Experience News looking forward, identifying trends, challenges and achievements that are driving the airport concessions business now and in the future. But for this very special issue, we’re instead taking a look back. In honor of the 20 th Anniversary of the Airport Experience Conference, AXN’s pre-conference issue is devoted to examining the evolution of the industry over the past two decades. The AXN editorial team has connected with a broad range of industry players in examining the myriad changes – mostly positive – that have impacted airport F&B and retail concessions, the ACDBE program, lounges and services and terminal and concessions design. Check out each of the four features for reminiscences about key turning points and honing of best practices. The industry has shifted with the times, becoming ever more-focused on delivering an extraordinary passenger experience. This retrospective issue also features a photo montage and timeline of past AX Conferences, where you’ll find candids of some of the many individuals who have supported AXN throughout our 20-year conference history. Many of us look a few years older these days, but some don’t appear to have changed much at all! Team AXC is proud of its 20-year contribution to the airport concessions industry. We look forward to seeing you at the 20 th Anniversary Airport Experience Conference, to be held April 1-4 at the Gaylord Texan in Dallas.

A 20-Year Retrospective Issue celebrating the 20th Anniversary of the Airport Experience Conference.

F&B & Retail Meet Shifting Traveler Demands

The ACDBE Program Evolves

Lounges, Services, Ramp Up Offerings

Design Reaches New Levels

With Many Thanks,

Carol Ward Editor-in-Chief

Airport Experience News carol@airportxnews.com

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AX NEWS JANUARY/FEBRUARY 2024

You Make 20 L Look at you, AXN ! You’ve hit the big 2.0! 20 years of conferences, awards, speakers’ dinners, and news. The SSP America team is proud to have been part of the ride. We’ve made our annual pilgrimage to the Conference. We’ve hopped up on stage to accept awards. We’ve fielded a lot of questions from Carol and Andy. And, of course, we’ve been proud to sponsor the Speakers’ Dinner. So, toss the confetti, blow the horns, and pop some champagne—and thanks for the memories, the news and industry fellowship.

Look Good, AXN!

DATA CHECK

TRAVEL DOWNTURN U.S. Trails In Competition For Global Visitors

BY CAROL WARD

he United States ranks 17th out of 18 top travel markets in terms of global competitiveness,

of travel development: National Leadership; Brand & Product; Identity, Security & Facilitation, and Travel & Connectivity. The U.S. scored poorly on national leadership, ranking 18 of 18 leading destination countries in terms of level of federal leadership. The study noted that most of the countries have a Ministry of Tourism within their governments, while the U.S. tourism effort is led by “U.S. officials cannot ignore the bold, decisive steps other nations are taking to advance and modernize their travel economies,” —U.S. Travel Association president and CEO Geoff Freeman the deputy assistant director of travel and tourism. The U.S. ranked 17th of 18 countries in terms of policies and funding to achieve tourism goals. “The study shows that travel to and within the United States is less modern, less efficient, and more cumbersome than in many parts of the world,” Freeman says. “It also shows that while other governments compete aggressively to modernize travel and gain market share, the U.S. lacks a strategy to grow its travel economy.

T

Most Desired Destinations

according to Euromonitor International, which was commissioned by the U.S. Travel Association to study the issue. The group said decades of underinvestment and a lack of focus and coordination from federal policymakers caused the U.S. to fall behind, while other countries actively apply robust strategies to increase travel and grow economic output. “U.S. officials cannot ignore the bold, decisive steps other nations are taking to advance and modernize their travel economies,” says U.S. Travel Association president and CEO Geoff Freeman. “The United States should aspire to lead the way into a new era of seamless and secure travel and capitalize on the many opportunities to grow this critical sector.” Because of the “stunning results,” U.S. Travel said it will launch a commission on seamless and secure travel, which will provide policymakers with a roadmap to practical solutions and help the government become a more invested partner that embraces travel’s economic value. Understanding The Slow Recovery U.S. Travel commissioned the Euromonitor International study to better understand the slow recovery of international inbound travel to the U.S. and how the country can more effectively compete for global travelers in the coming decade. The study analyzed four categories

#1 UNITED STATES SPAIN FRANCE ITALY CANADA JAPAN AUSTRALIA MEXICO

UNITED KINGDOM GREECE

Source: Future Partners (January 2023)

Top Visited Destinations

FRANCE SPAIN #3 UNITED STATES ITALY

TURKEY MEXICO UNITED KINGDOM GERMANY GREECE CHINA

Source: Tourism Economics (2023 Forecast)

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DATA CHECK

International Competitiveness: International Visits (International visitor arrivals in 2023* | % of 2019 level)

U.S.

84%

FRANCE

93%

MEXICO

93%

U.K.

94%

SPAIN

100%

GREECE

105%

U.A.E.

108%

TURKEY

109%

*Full-year forecast based on Q1-Q3 historic database Source: Tourism Economics

The U.S. is more selective in issuing visas, with visa waivers afforded to only 42 countries globally. The top six countries, in contrast, offered visa waivers to residents of 95 or more countries. In terms of visa wait times, the U.S. ranks last among the 18 countries, recording an average wait time of 162 days. The leaders – Australia and Turkey – average a one day wait. The U.S. fared better in customs and

entry wait times, landing in the middle of the pack. Several other countries are beating the U.S. in adopting technology to ease the passenger journey. The study showed that biometric capabilities are present in 36% of U.S. airports, with the U.S. ranking 10th among the 18 countries surveyed. Thailand led the field with 100% biometric capability, followed by China at 86% and Canada at 81%.

Freeman notes that other countries are proactive in efforts to make the traveler journey more seamless. “The United Kingdom is updating its security screening technology to eliminate the ban on carry-on liquids,” he says. “China announced it will allow some European and Asian countries to travel visa free and Canada added visa free travel for countries specifically excluded from traveling visa free to the United States. “The findings of the report are eye-opening,” Freeman continues. “The competition is outperforming us. The economic cost of these failures is in the billions of dollars.” While the U.S. is still the most desired destination for global travelers, it slid to third in total visitation (behind Spain and France). In 2023, it is estimated that the United States welcomed nearly 67 million international visitors—down from 79 million visitors in 2019 and only 84% recovered from pre-pandemic levels, which is far behind other competitors’ recovery rates. The shortfall pushed down the U.S.’s market share of inbound travel to 5.3%, from 5.4% prior to the pandemic. The study shows that travel to and within the United States is less modern, less efficient, and more cumbersome than in many parts of the world. It also shows that while other governments compete aggressively to modernize travel and gain market share, the U.S. lacks a strategy to grow its travel economy.

Overall U.S. Competitiveness Score Rank Country

Score

1

United Kingdom

72/100

2

France

66/100

3

Turkey

65/100

4

Italy

61/100

5

Canada

59/100

6

UAE

59/100

7

Spain

58/100

8

Germanv

54/100

9

Greece

52/100

10

Thailand

52/100

11

Australia

51/100

12

Brazil

50/100

13

Saudi Arabia

50/100

14

South Africa

49/100

15

Mexico

49/100

16

Singapore

47/100

17

USA

47/100

18

China

47/100

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LATEST BUZZ

BRINGING THE OUTSIDE IN PDX’s New Terminal Has Hyperlocal Design, Natural Elements

BY SARAH BELING

oon, visitors flying to Portland International Airport (PDX) won’t even have to step outside

and restaurants, mezzanine, concourse connectors and security checkpoints will launch in May, while new lounges, restrooms, exit lanes, and additional concessions will open in 2025. Plans for the project began in 2011, says Allison Ferré, media relations manager for Port of Portland, “when the conversation turned from ‘should we make these upgrades to how should we make these upgrades to increase accessibility, capacity and resilience.’ But when we asked people who work at PDX, live around PDX and travel through PDX what we should do,” she adds, “the answer was: ‘don’t change it much, unless you make it more local’ — so that’s what the team set out to do.”

Above: The new terminal at Portland International Airport has a biophilic design that seeks to capture the landscape of the region. Architects have brought plant life into the terminal - including full-sized trees - and skylights bring in natural light. (photo credit: Courtesy of Port of Portland)

S

to embrace the verdant, vibrant feel of the Pacific Northwest. The forthcoming new main terminal of the PDX Next project blends sustainable, modern amenities with hyperlocal design touches ranging from a Douglas fir timber roof to the (partial) reemergence of PDX’s beloved 1980s teal carpet, in an aesthetic that the airport team hopes travelers will embrace as “less like an airport, and more like a neighborhood.” The $2.15 billion dollar undertaking will open to the public in two phases: the new terminal’s check-in stations, garden, stores

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RETAIL. IT’S AT THE OF EVERYTHING WE DO.

LATEST BUZZ

Right: Portland International Airport is finishing up its $2.15 billion PDX Next new terminal project, which blends sustainable, modern amenities with hyperlocal design touches. Phase 1 will open in May, while Phase 2 is expected to be completed next year. (photo credit: Courtesy of Port of Portland)

After the airport’s Concourse A was torn down in 2019, the PDX team worked with ZGF Architects to finalize plans for a new terminal in 2020 and began construction in 2021. Building a new terminal that fully reflected Portland’s outdoorsy reputation was a key priority in the design process, says, Ferré, who notes that the main terminal’s open-air feel is “inspired by a walk in the forest.” The new main terminal “will bring elements of the great outdoors even closer to PDX, and the biophilic design is a nod to the landscapes of the region,” she adds, noting that “travelers will see plant life throughout and real-life trees forming a mini-greenway in the core of the airport, with thoughtfully placed skylights mimicking sun rays peeking through evergreen trees.” ZGF has a long history with PDX, says lead designer Gene Sandoval, which began in 1965 when Port of Portland developed a master plan that doubled the size of the original terminal. The group has remained the Port’s primary architectural partner, partnering with the airport on numerous expansions and renovations over the years. For the team at ZGF, “One of our biggest challenges was how to modernize and evolve this vintage airport and keep it operational while expanding it,” he adds, noting that during the PDX Next project they were able to minimize passenger disruption and keep PDX’s ticket lobby and checkpoints uninterrupted throughout the five-year construction window. When it came to design, “we wanted to enhance the passenger experience by leveraging a comprehensive biophilic design strategy,” says Sandoval of the terminal’s more than 5,000 plants, 72 large trees - some up to 25’ tall - and cascading gardens. “Biophilic design helps increase traveler comfort and employee productivity,” he says. “As a result, the environment at PDX is designed to reduce the stress experienced by many while traveling. Almost every corner of the new terminal features touches of Oregon’s signature greenery and access to natural light.” The landscape flow “also acts as a wayfinding tool,” notes Sandoval, in taking passengers from security checkpoints to terminal gates.

Prioritizing Sustainability Another crucial priority for the project? Sustainability. Sandoval emphasizes that the ZGF and PDX teams were able to reuse much of the airport’s current infrastructure in the renovation process, as well as optimize airport energy usage. “For operational carbon, the size of PDX’s main terminal was doubled while cutting energy use in half, and space heating was electrified with an open loop, ground source heat pump,” he explains. “This allows the project to continue to save operational carbon as the utility grid greens over time,” he adds, noting that the teams also worked to ensure that the new terminal is future-proofed both for increases in passenger traffic and against threats from the Cascadia subduction zone. “When the architects at ZGF proposed building a nine-acre mass timber roof for the new main terminal, we responded with a question: ‘can it be built in a way that’s better for the land and the people?’”

Below: The new PDX terminal will be primarily constructed from mass timber sourced from within 300 miles of the airport, part of the airport’s sustainability-focused approach to construction. (photo credit: Courtesy of Port of Portland)

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LATEST BUZZ

says Ferré. “One hundred percent of the wood that’s used throughout the new main terminal (for the ceiling, concession buildouts and flooring) is sourced from within 300 miles of the airport, from small family- and community- owned forests and Tribal lands,” she adds. The ZGF team notes that PDX will be one of the first airports in the world to be mostly constructed from mass timber. The project features 2.6 million board feet of wood traceable back to mills within a 300-mile radius. “As the airline industry works towards their own carbon neutral goals,” says Sandoval, “wood is a building material that helps push that needle towards achieving them.” The push to make PDX a Portland proud airport extends to the new terminal’s retail and dining program, says Ferré, who notes that new concessionaires are 100% local brands. The main terminal “takes cues from the fabric of the city of Portland itself,” says Sandoval. Travelers can expect to encounter “independent storefronts clustered together along a tree

lined ‘street,’ musicians strumming guitars on the corner and cafe seating spilling out onto patios,” adds Ferré, in what airport officials hope will be a relaxing “neighborhood feel” for passengers waiting for their flights. Newcomers to the PDX “neighborhood” include 21 new dining and retail operators, set to open between May 2024 and the end of 2025, in a combination of license agreements and direct leases, says Ferré. Highlights include craft brews from the Loyal Legion Taphouse, vegan truffles from confectioner Missionary Chocolates, artisan apparel from the family-owned Orox Leather Co., and of course, plenty of java from return operators Stumptown and Portland Coffee Roasters. There’s another fan-favorite returning to the terminal, too - PDX’s iconic teal carpet, first installed in 1988 and beloved by locals and visitors for decades (see related story, page ??). The large-scale renovation should be a boon to the airport - and city’s - revenue, says Ferré. “One of the goals for

Above: The new terminal will feature “tree-lined streets” interspersed with local shopping and dining. All of the concessions in the new terminal are brands local to Portland and the region. (photo credit: Courtesy of Port of Portland)

PDX Next was to keep the money in the region by providing jobs and economic opportunities for local businesses,” she says. An estimated 32,000 workers will contribute to the project by its completion and that $290 million in contracts were awarded to Minority, Women Owned, Emerging Small Business. An inclusive, sustainable and locally focused new terminal is something that Ferré and the team at PDX hope will bring “a sense of pride” for locals, she adds. “PDX is a place for everyone, and this project is about making our airport even more of a reflection of the region we love. It belongs to everyone.”

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Summer House Santa Monica Orlando International Airport

Boston Bruins Bar Boston Logan International Airport

Folse Market Louis Armstrong New Orleans International Airport

Heart of Austin Austin-Bergstrom International Airport

Adventure North Minneapolis–Saint Paul International Airport

earthbar Los Angeles International Airport

Shaping Airport Hospitality Delaware North has been a pioneer in airport concessions, enriching the industry with a history of innovation and dedication to traveler satisfaction. We have continuously evolved to meet the dynamic needs of modern travelers – while delivering consistent results for our clients over the course of eight decades in this sector. We bring a seamless fusion of culinary innovation and convenience to every corner of the airport. Our full-service restaurants are not just places to eat; they are destinations that give a streetside experience. For the on-the-go traveler, our convenient grab-and-go and quick service concepts provide a quick and satisfying solution without compromising quality. In addition to our exceptional dining o‚erings, we bring a world of retail possibilities to our airports. From stylish fashion boutiques to tech-savvy gadget shops, adventure gear and everyday necessities – our retail spaces are chosen with a discerning eye for quality and uniqueness. At Delaware North, we bring more than just services; we bring an atmosphere that transcends the typical airport experience. It’s a journey where every detail, from a gourmet meal to a unique retail find, contributes to the overall satisfaction of travelers.

The Market on Las Olas Fort Lauderdale-Hollywood International Airport

explore AFAR Detroit Metropolitan Wayne County Airport

A Global Leader in Hospitality and Entertainment.

DelawareNorth.com | To learn more about how Delaware North can delight your travelers, contact April Bivens at ABivens@delawarenorth.com or Jason Ricko at JRicko@delawarenorth.com

©2024 Delaware North

THE EVOLVING CONCESSIONS Concepts, Merchandise, Pricing And Buildouts Have All Seen Big Shifts In Two Decades

BY CAROL WARD

There are still more than a handful of airport concessions industry players who remember programs far different than what we see today. The “hot-dog-on-rollers” time – harkening back to the 1980s and early 1990s – is oft-mentioned as a starting point before a three-decade evolution of the concessions industry. Then, airport concessions were little more than a bar or food stand offering a quick beer and questionable hot dog, and airport retail consisted of magazine and book offerings with few sundries and little more. The first signs of upheaval came in the mid-1990s when operators began seeking national brand partnerships and upgrading offerings for passengers. After a large hiccup due to the terrorist attacks on September 11, 2001, the evolution continued, this time with programs concentrated mainly on the secure side of the terminal. “Prior to 9/11, anyone could walk from pre- to post security,” recalls Stan Synkoski, vice president of development for NewsLink / PremAir Hospitality Group . “The biggest change [after 9/11] was the decline in business pre-security and the increase in business post-security,” he said, noting that the typical airport had a concessions program heavily weighted to the pre-security side.

Left: Newslink / PremAir Hospitality Group’s Stan Synkoski says one of the biggest changes to

concessions programs over the past two decades has been the shift to concessions concentration on the secure side of the airport.

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LANDSCAPE

Above: Proprietary brands, and particularly proprietary bar concepts (SSP America’s Bad Egg at SEA pictured), have thrived because they can be tailored specifically for a travel audience.

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“That put a real twist on things because they were trying to cram so much into the tiny little post-security spaces,” Synkoski says. “Luckily a lot of those airports were up for renovation anyway, so old concourses were knocked down or expanded or both, so they were able to make room for concession space post-security. But for that first five to 10 years after 9/11, post-security concession space was very, very hard to find.” Real Estate Shifts It was then that airports began looking at their terminal footprints in new ways, and focusing on the revenue generation that could stem from placing concessions in key locations. “No one was talking about non-aeronautical revenues” in the 1990s, and the subject was only beginning to bubble up in the early 2000s, says Les Cappetta, principal at Airport Alliances LLC . “[Non-aeronautical revenues] weren’t that big a deal in the budgets and nobody really got involved,” he says. “Concessions were controlled by two to four dominant players, and most of the models were master concessionaire or prime. There were some developers involved in the early nineties and some direct leases, but for the most part, it was the major players.” The lack of importance placed on concessions by airports meant that food and beverage and retail offerings were “relegated to remote, undersized. ill-configured spaces,” Cappetta says. That began to change in the early- to mid-2000s, when airports began tapping into the revenue opportunities and national brands began making headway in airports.

“I think we got very ambitious in those early days in the 2000s of thinking that American consumers were going to be willing to treat our airports like a mall,” says Tonja Pastorelle, president, Pastorelle Marketing Group . “I think unfortunately over time that has not proven to be the case from a retail perspective.” She notes that Europeans and others across the world are accustomed to shopping in airports, but North Americans are less so. Part of the problem, Pastorelle says, is that U.S. airports tried to capture the enthusiasm for luxury brand shopping seen elsewhere, but without designing a shopping core. “For example, if we wanted to add specialty retail but we didn’t have the space to create an entire retail environment, in many cases we just plopped them down every few gates here and there without creating…a concentration of stores,” Pastorelle says, adding that those same global airports typically have policies that prohibit passengers from going to their gate until the flight is called, providing more impetus to shop. The F&B Offering As airports and concessionaires began moving concessions post-security as much as possible and focusing on ways to maximize revenues, national brands became a focal point for many. Cappetta remembers days when national brands viewed airports as a risky proposition, but by the time the first Airport Experience Conference happened 20 years ago, brands were front and center in most airport concessions programs. “Back in 2004 or 2005, you still had programs that were focusing a lot on

Above: Customer-facing technologies such as self-checkout (Delaware North’s The Market On Las Olas pictured) have been adopted by a range of concessionaires, with more innovations to come.

Above: Les Cappetta, principal at Airport Alliances LLC, remembers days when national brands viewed airports as a risky proposition, but by the time the first Airport Experience Conference happened 20 years ago, brands were front and center in most airport concessions programs.

Above: Specialty retail has struggled in part due to the lack of a shopping core in most airports, consultant Tonja Pastorelle says.

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national brands, especially on the food beverage side,” says Pat Banducci, chief commercial officer for SSP America . Local brands were just starting to find their footing in the airport space. In subsequent years, local brands would continue to expand in airports, in some cases nearly eclipsing the national brands that had come before them. When Liz Grzechowiak first entered in the industry in 2013, working in the concessions department at Minneapolis-St. Paul International Airport , the move toward local brands and creating a sense of place was in full swing. “Everybody was chitter chattering about wanting to make their program local, bring that [sense of place] to fruition,” she says. “Then in the subsequent years, we saw a lot of those contracts coming to life, bringing the sense of place.” After perhaps too big a swing toward local, a balance has emerged, Grzechowiak adds, noting an increased awareness of “the need to respect what national brands accomplish in the airport space.” But Grzechowiak, who now is senior director, brands and concept development for Delaware North , says the local element remains crucial. “I think airports definitely want sense of place,” she adds. “You should be able to fly into an environment and get the vibe of the city that you’re visiting, and airports should have that opportunity to leverage that exposure to entice people to come back and visit.”

Left: Pat Banducci, chief commercial officer for SSP America, has seen street pricing policies evolve over the past 20 years. He also notes the recent moderation of airport expectations on rent and minimum annual guarantees.

Banducci also notes the newly achieved balance. “I think it’s settled in to something where it’s still this desire for a sense of place, so local brand [coupled with some] popular national brands for a few categories,” he says. But adding to the equation is a host of proprietary brands from operators – not necessarily a new phenomenon, but one that is gaining favor again. Banducci notes an “acceptance, where it makes sense in the airport environment, for boutique proprietary brands where operators can become creative and design concepts really fit well in the airport environment. “Bars are probably the best example,” he says. “Some of them, maybe most of them, wouldn’t work on the street but they’re perfect for the airport environment, where you’ve got some travelers looking for comfortable space and others in a hurry.” Another relatively recent success story for airports is the involvement of celebrity or well-known chefs in airport restaurants, and a general elevation of the dining offer.

Above: One change over the past two decades has been an elevation of the F&B offerings in airports, with chefs offering unique dining experiences and celebrity chefs eager to operate in airports, says Delaware North’s Liz Grzechowiak. Below: Hudson’s Evolve concept requires a relatively large footprint but allows the retailer to feature several specialty retail brands in a single store that also sells travel essentials.

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magazines, books and newspapers, and another 25% were in tobacco products. “It is just remarkable to me that this model, the convenience model, has just been able to evolve and change over the years to not only survive but to thrive,” Quinn says. Nicole Burns, regional vice president, retail operations, Paradies Lagardère , started out as a buyer, so she knows firsthand how traveler demands in retail have shifted. In the early to mid-2000s there was a heavy focus on periodicals in travel convenience stores, but their popularity began to wane with the advent of electronic readers and connectivity onboard airplanes. Once connected, people could work or play on their electronic devices, thus lessening the need for reading materials. Burns has also seen a marked shift on the packaged food side of the business. “Customers are much more educated and much more aware of what they’re eating,” she says. “They have higher expectations for quality of food, for things that are dairy free, non-GMO…. We’re always going to sell king-sized peanut M&M’s, but we’ve definitely seen a shift with customers wanting and expecting more from us as a retailer on what the assortment looks like.”

Grzechowiak, for example, says Delaware North has partnered with the Culinary Institute of America to create opportunities for airport chefs to partner with more senior chefs throughout the company’s broad portfolio of airport and non-airport restaurants. She also notes the celebrity chef momentum. “It started with the Wolfgang Pucks of the world, but now we’re seeing it” on a much broader basis, she says. “We’re also seeing upper echelon chefs who historically had full-service restaurants [begin to] see the residual income that lives within the world of licensed concepts. And they are keenly interested in QSR concepts.” Retail Priorities Shift As airport F&B has reinvented itself multiple times over the past 20 years, retail has gone through its own evolution as passenger wants and needs have changed. Brian Quinn, chief operating officer - retail, North America, Avolta , the parent company to Hudson and HMSHost , says the airport retail model, especially the category now called “travel essentials”, has proven to be “exceptionally resilient.” When he started at Hudson more than 30 years ago, about 50% of sales were in

Above: Partnering with local brand concepts, such as this Hip & Humble store operated by Paradies Lagardère at Salt Lake City International, has been on trend for well over a decade.

Above: Quality and selection expectations in travel essentials retail have ratcheted up over the past two decades, says Nicole Burns of Paradies Lagardère.

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In later years, airport grab-and-go would become a cornerstone of the travel convenience offering. “I would say our explosion in demand for grab-and-go was when we were just on the cusp of Covid 19,” says Burns. “And then obviously during Covid, with all the restaurants closed, that’s where it really became a key contributor for us as an organization.” As a category, travel essentials has flourished due to its ability to evolve and change with the demands of the consumers. Specialty retail, on the other hand, has had very mixed performances. “I think we’re going to continue to struggle to find specialty retail concepts that make money,” says Pastorelle. “There are some that do well, certainly electronics,” but many other categories struggle. One success area, she says, are with larger format stores that allow the operator to build out a market district or feature brands in a store in-store approach. Avolta’s Quinn admits that the category has “always been a little challenging,” but says sunglasses, travel stores and electronics continue to do well. Others are a bit more precarious. “We saw a big risk in doing other brands because they [may be] the popular brand at the time, but they’re also trying to survive a seven-to-10 year contract, and sometimes a brand just doesn’t have the legs to do that,” he says. Hudson’s solution was to create the larger format Evolve concept. Modeled after a duty free store, Evolve relies on convenience retail to “get the customer across the threshold.” The stores also host a variety of store-in-store-style specialty retail concepts. “It’s a larger format store for us … and it really allows us to represent brands that are very hot at the moment, while not having to worry about whether or not they’ll be long lasting. If they don’t work, it’s a relatively inexpensive change-out.” Local has also made inroads on the retail side, and Burns says it has allowed Paradies Lagardère to partner with local entrepreneurse. “Customers want to buy from brands that have meaning and that give back to communities, and they want to be part of that brand story,” Burns says. “That’s been a really fun part about being in the business, because now you get to meet these amazing local entrepreneurs that have incredible ideas. We’ve brought a lot of different brands to life.” One example is Hip and Humble, which made its debut at Salt Lake City International Airport is now being rolled out in other airports.

Pricing and Costs One thing long-time players uniformly remark on is the general upgrade to the passenger experience that has happened over the past 20 years. “Concessions programs and terminals are just becoming much more evolved, much more beautiful, much more engaging for the customer than they were 20 years ago,” says Pastorelle. The innovation in the airport concessions space is undeniable, but the general upgrade to the overall passenger experience has come at a cost. Build-out costs have skyrocketed over the past two decades. Where once costs were in the neighborhood of $300-400 per square foot, now they are regularly above $1,000 per square foot and approaching $2,000 in some markets. Top that with higher wages and higher costs of goods, and it’s become increasingly more challenging to make a profit in airport concessions. “Capital costs are five to 10 times more expensive than street-side now,” notes Grzechowiak. “Yes, sales are higher in the airport environment than they are typically in a street side environment. But when you compound all these effects of labor and capital and the cost of goods in the airport environment, you’re not seeing a huge shift in the contracts in the way you’re seeing a huge shift on the pressure of operating in the environment.” One way to address the skyrocketing costs is through price increases. But while the issue of pricing is a constant talking point, operators ultimately have little leeway in the vast majority of North American airports. Over the past three decades, the industry has sashayed from few limits on pricing to strict street pricing policies to somewhere in the middle. “Street pricing was in vogue” 20 years ago, notes Banducci. “There are still a few holdouts, but I think most airports have realized the airport business isn’t the same as the street” and have adjusted accordingly, albeit not to the level that most operators want. Banducci says airports have, relatively recently, adjusted their expectations in other ways. MAGs (minimum annual guarantees) and the desire for really high percentage rent has moderated a bit,” he says. “That’s a big plus - rents were going up year after year, but now I’ve noticed that’s kind of flattened out because airports want a viable program.”

Above: Brian Quinn, chief operating officer - retail, North America, Avolta, says the travel essentials sector has been “exceptionally resilient.” over the past two decades.

Looking Ahead Leading operators and consultants say the focus over the next decade will continue to be on the customer experience. Travelers have come to expect innovative concepts, luxurious build-outs and street-comparable pricing, and all that will likely continue. But the traveler demographic is changing, and with that comes a change in demands. One area of continuing evolution is technology. In the past half-dozen years or so, most food and beverage and retail operators have adopted various customer-facing technologies, mostly focused on allowing for frictionless transactions that allow travelers to purchase without interacting with a store or restaurant team member. Quinn says self-checkout has been widely adopted by travelers where its available in Hudson stores. “Our customer conversion rates have gone up much higher,” he says, noting that around 70% of the customers opt into the self-checkout mode. “I think that the guest experiences being positively impacted by technology that allows them a multitude of ways to shop, get their product and pay for their product,” says Grzechowiak. She also notes the technology that has been integrated into the airport environment by airports, helping with wayfinding and other goals. Banducci says technology adoption among operators will continue to grow. He says potential labor savings are one factor, but the bigger goal is giving travelers what they want. “We see it everywhere – all of our colleagues in business are [adopting] tech, and we’ve really put a lot of effort into it the past few years,” he says. “It allows travelers to take more control over how they order, pay for their experience and get on with their day.”

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ACDBE, DBE Programs Have Expanded Opportunities, But Challenges Remain

BY ANDREW TELLIJOHN

Greg Plummer was working in finance – unhappily – in the early 2000s when his friend, Anwar Daniels, introduced his father, Clarence Daniels. Clarence Daniels, a long-time executive with Host International, had gone out on his own and started CMS Hospitality Inc. , an Airport Concessions Disadvantaged Business Enterprise (ACDBE)-certified operator of restaurants at Los Angeles International (LAX) that was trying to grow within the industry. Plummer fell in love with restaurants and the airport setting and found his purpose: becoming an entrepreneur. “Clarence gave us the autonomy to make decisions,” he says. “He gave us the autonomy to make suggestions and recommendations that would help the business. We didn’t always get everything right but we got some things really right. We were able to learn.” The Program’s Role Plummer worked with Clarence Daniels to find brands to partner with on a direct bid at LAX. CMS Hospitality ultimately became the first ACDBE company to win a prime contract there. “That was fun but super daunting,” Plummer says. “We had done some conversions of locations, but we had never done from start to finish.”CMS Hospitality would go on to win some more deals. The company grew until Clarence Daniels sold its holdings to HMSHost. Plummer built on the experience of working with CMS to go out on his own. He is now CEO and managing partner of Concord Collective Partners , which operates a dozen branded restaurants at LAX. He’s ACDBE

certified and has the same goals now that Daniels had two decades ago: to build a business that expands within and beyond the walls of LAX. While Plummer and Clarence Daniels are success stories stemming from the ACDBE program,, Plummer spends more time focusing on being a good operator. “I realize that’s a box we have to check, but I really put a lot of stock in being good at what we do and being value-added partners in deals we participate in because, God forbid, the program goes away, I don’t think I would go away.” Plummer would like to see a deeper pool of participants in the program. He says while the ACDBE program affords some businesses a seat at the table that otherwise might not be able to participate, it does not provide any economic advantages. “We don’t get any economic relief or benefit, so we really just want to compete and be recognized as good operators,” he says. Program Has Worked, Evolved The DBE program was formed in 1980, authorized as part of the Civil Rights Act of 1964 and established under the eye of Leon Watkins, then the director of FAA Civil Rights, and Clark Sharpe, civil rights administrator in the southeast region, who worked closely with him. Warner Session, a principal at the Session Law Firm and member of the board of directors at the Metropolitan Washington Airports Authority , was staff counsel working under Congresswoman Cardiss Collins, who wrote the law creating the ACDBE program, enacted in 1987. Session has been watching the program being administered ever since.

Above: Warner Session, principal at Session Law Firm, says the Supreme Court makeup means the ACDBE program probably has rocky times ahead.

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He points to companies like CMS Hospitality and Crews , which passed to Nick Crews, now CEO and managing partner, as examples of successful operators who exemplify the success of the program and who have started creating generational wealth. “I would say the headline is, it has worked,” Session says. “The objective was to be able to bring minorities and women into the airport concessions economy - food and beverage, retail, advertising - and to that extent it has worked.” The ACDBE program also has evolved considerably over the years, say observers, including Michael Freilich, who spent 17 years with the Federal Aviation Administration before retiring in 2019 and starting Michael Freilich Consulting . Freilich, along with his counterpart Bob Ashby with the U.S. Department of Transportation , helped write the rule that split concessions under a separate regulation. They worked in tandem throughout the years to strengthen the program’s compliance oversight.

“There had always been a strong [compliance program] in place, but we really ramped it up dramatically,” he says. The FAA, he says, recognized it could not monitor each airport every year. So, it focused on the 30 or 40 airports with the vast majority of traffic. With learnings from those airports, FAA created online assessment programs, and it created ways to share guidance on commonly misunderstood aspects of the program and to highlight best practices among airports. “We found people are doing good things, why should only that airport benefit,” he says. “Let’s tell everybody about that.” Freilich and Session also pointed to joint venture guidance, developed in tandem with the DOT, that helped clear up confusion on how those partnerships could be counted toward the meeting of goals. Published in 2008, the more-than 40-page document has been tweaked and revised in the years since. “It’s really helped strengthen the program, helped people know what they need to do, helped improve focus on making sure that the people that are supposed to benefit from the program are benefiting,” Freilich says. That was vital, in that as the ACDBE program evolved, more of the deals were being done as joint ventures between certified companies and prime operators rather than as subcontracting operations.

Above: Michael Freilich, founder of Michael Freilich Consulting, spent 17 years at the Federal Aviation Administration helping improve and update the ACDBE program.

“In the early days of the program, whether intentional or unintentional, there was really sort of disproportionate allocation of the benefits of the bargain,” Session says. “The DOT has been helpful in that regard because they’ve given guidance,” he says. “You can go to their website and see specific guidance on what a good joint venture should look like.” A few years later, as part of a mandate from the FAA Modernization and Reform Act of 2012 that reauthorized funding of the agency, the FAA developed mandatory certification training to educate certifiers on common rules and regulations governing

Below: Concord Collective Partners, an ACDBE-certified firm, operates several restaurants at LAX. Greg Plummer, CEO, is one of hundreds who have benefited from the federal program.

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the program. It took a couple years to develop and in the first iteration, the agency trained 800 certifiers nationwide, Freilich says. Finally, as a way of centralizing resources and connecting participants from certified companies to airports, the agency created FAA Civil Rights Connect to provide an electronic web-based information system to share information, gather compliance review reports and complaint investigations and put “everything the FAA needs to know and all the users need to know in one place,” he says. Challenges Still Exist While many improvements have been made, many challenges still exist. Nancy West, founder and managing member at Exstare Federal Services Group , has also been a lifelong advocate for the program. In addition to previously cited victories, she counts adding goal-setting for rental car companies within the ACDBE program as another major enhancement in the years since it was founded. She also applauds the work of the Airport Minority Advisory Council, in particular, and a lot of businesses that understand the intent of the program and have taken steps to improve practices.

And West says some airports take their diversity efforts seriously, including Phoenix Sky Harbor International Airport (PHX) , Hartsfield-Jackson Atlanta International Airport (ATL), Baltimore-Washington International Thurgood Marshall Airport (BWI) , Richmond International Airport (RIC) and, particularly in recent years, Denver International Airport (DEN) . DEN, she adds, has a mentor-protégé program, a detailed training program and many more efforts underway to make sure small companies have access to opportunities. But she sees more work to be done. The playing field, she says, is far from level, even after more than 40 years. And she’s calling on high-ranking individuals in the industry to step up and execute the intent of the program. “A lot of smaller companies don’t have the same capacity as others in terms of staff resources,” West says. “Usually, the owners are running everything.” That makes it challenging for them to add to their list of responsibilities figuring out how an airport works, she adds. “The hurdles that existed even 40 years ago are still going on,” West says. “Those big hurdles are access to capital, getting bonded and insurance. Because of the size of projects, in many cases - on the construction side and on the concession side - you have a personal net worth standard that is very outdated.” So, what would be helpful? PHX, West says, has long been unbundling portions of its opportunities so small businesses can bid on fewer locations and have a chance to compete. In line with DEN’s protégé program, Ron Gomes, who retired recently as vice president of strategic alliances with HMSHost , told AXN during a recent podcast interview he’d like to see the ACDBE program include a mentorship program that would allow growing companies to retain membership in the program even as they exceed net worth goals if they agree to mentor one or more smaller participants. “Right now, the young bucks are at odds with the older generation in the industry because the young guys feel like they’re being blocked,” he says. “To my mind, that could be pretty helpful.” The personal net worth cap of $1.32 million remains a big hurdle. Even at the adjusted rate, Plummer says, it’s nowhere near high enough to allow small businesses to truly compete. Even at $10 million, he adds, they’d still be disadvantaged compared with larger well-capitalized primes.

Spinning Forward Freilich sees the ACDBE program as a complicated effort that took time to mature but is now in a thriving adulthood state. Now retired from the FAA, Freilich continues to monitor the program. With the nation’s airports needing infrastructure upgrades and large sums of money coming in - like the $25 billion allocated to airports through the 2021 Infrastructure Investment and Jobs Act - he wants to see the program perform even better and is working to build a consortium aimed at finding ways it could do so. The timing may be good. Throughout its history, the combined DBE and ACDBE program has faced challenges. The program does have some Supreme Court backing legitimizing its cause, stemming from the U.S. Supreme Court’s 1995 decision in Adarand Constructors v Pena. That ruling allowed for the program’s existence as long as racial classifications passed strict scrutiny review, meaning it must serve a compelling government interest and must be narrowly tailored to further that interest. But with the makeup of the current Supreme Court, it’s likely further challenges are coming. Session points to the 2023 Supreme Court ruling banning the use of race in undergraduate admissions at universities as evidence that such programs are under increased scrutiny. “It is really going to be a political solution, a political answer,” he says when asked what the future holds for the ACDBE and DBE programs. “First of all, the advocacy to continue the program has to continue and it has to be ramped up to be even more vigilant. Ultimately, Congress will have to legislate and the Supreme Court will have to opine. Given the composition of the Supreme Court today, given the recent decision in higher education, it’s problematic.” In the meantime, observers and participants like Plummer celebrate the victories created by the program, even as they suggest solutions for challenges that still exist. “I know I’m grateful for the opportunities it afforded me,” Plummer says. “The intent was to bring in companies, mentor companies to be able to perform in this complex, nuanced environment. And the program has definitely been successful at achieving that end result. “If it weren’t for the program, I certainly doubt I would be an operator and entrepreneur in the airport space,” he adds. “It’s not for lack of ability, but more so the way the contracts are designed.”

Above: Ron Gomes, retired vice president of strategic alliances from HMSHost, would like to see the ACDBE program add a mentorship provision allowing graduates of the program to stay if they assist a younger, smaller business.

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