Airport Experience® News - Food & Beverage Issue 2025

not be a factor because those high-spend lounge users were unlikely to visit typical airport concessions anyway. “Those high-end demographics that are drawn to the Centurion Lounge were never much of concessions food and beverage buyers at airports – they weren’t going into the Chili’s or the TGI Friday’s or the proprietary brands,” he says. “They just weren’t ever using those kinds of restaurants so that when the Centurion Lounge got installed, there wasn’t a degradation of sales as a result in that particular zone.” But Freibrun does recognize that “the jury is really out” on lounges’ impact on concessions considering the lack of independent data. On the lounge panel at AXC, Schneider remarked that he hopes to see more research conducted on this topic, noting that having hard data may help with finding solutions. “Because we do have to figure out a way to work collaboratively together on this,” he said. Synergistic Solutions Despite their concerns, concessionaires do believe that their businesses can co-exist with lounges, provided some important steps are taken. “It requires intentional planning and collaboration,” Bisset says, and he proposes several solutions: “Incorporate lounges into RFP planning to allow concessionaires to appropriately model rental yield and forecast performance; explore hybrid models where existing food and beverage operators manage or support lounge services; and ensure lounges contribute comparable total rent, both fixed and percentage rents, to that of food and beverage units, reflecting their full commercial impact on the terminal environment.” Indeed, lounges and concessions are part of the same passenger amenity ecosystem, ARRA’s Weddig points out. “That is, lounges – especially third-party lounges – effectively act as concessions and should be considered as part of the overall program when planning programs and RFPs,” he explains. “Lounges and concessions should not be programmed in their respective vacuums; they need to be considered together in order to maintain economic

viability for concessionaires, as well as a high-quality offer to passengers.” Weddig adds that it’s especially harmful to concessions when lounges are opened during lease terms without mitigation. “Allowances need to be made during the planning,” he says. “Perhaps [airports should plan] fewer concessions outlets in recognition that lounges are peeling off a portion of passengers and leaving a smaller customer base for food and beverage and retail operators; perhaps lower rent expectations in recognition of the smaller customer base meaning lower sales potential; perhaps a different merchandising mix to account for passenger profiles of lounge patrons.” Freibrun believes it’s perfectly reasonable for airports to seek opportunities to add lounges at the same time as they’re adding other concessions locations. “Airports understand there are so many pressures on food and beverage operators these days to turn a profit, and they’re listening – I really think they are,” he says. “I can tell you that we as a consultancy are listening. We understand the pressures of labor, wages, royalty fees, the significant capital investment costs that seem to be ever increasing. You have to pay attention to those factors or one day we’ll have fewer concessionaires to help deliver an important experience for airports.”

Above: Andrew Weddig, executive director of the Airport Restaurant & Retail Association, notes that there is strong anecdotal evidence supporting his assertion that lounge operations cannibalize sales from concessions. While he believes lounges and concessions can co-exist, it will require the airport making certain allowances in the planning process to mitigate risks for concessionaires.

services to traditional concessions. “Given the substantial capital investment and high rent obligations involved with concession financial models, lounges offering extensive complimentary amenities can distort the market if not carefully managed, potentially rendering nearby concessions units financially unviable,” he says. Song believes the reality is a bit more nuanced. “Lounge users are typically high value travelers who actually spend more across airport services,” he claims. Knipp shares this view. “Our research shows that lounge guests are among the airport’s highest-value customers,” she says. They spend an average of $137 in the airport, nearly double that of non-lounge users. This spending extends across food and beverage, retail and services throughout the airport. “What’s particularly revealing is the time allocation: lounge guests spend only about 9 percent of their airport dwell time in the actual lounge, while dedicating 15 percent of their time to concession areas,” Knipp continues. “Lounges are actually amplifying the overall airport economy by attracting and cultivating high-spend travelers.” Stephen Freibrun, senior principal at ICF , speculates that cannibalization may

Above: David Bisset, chief development officer for Paradies Lagardère, says that when new lounges are opened near existing food and beverage locations, the negative impact on concessions sales can be significant.

20

AX NEWS JULY/AUGUST 2025