Airport Experience® News - Post-Conference Issue 2024

APRIL/MAY 2024 / V22 N254

FULL COVERAGE OF AXC 2024

We Bring the Cool

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5/6/24

Award Winners Announced At AXC Gala

CEO Roundtable Yields Vibrant Discussion

Airports Enhance Employee Amenities

Dynamic & Distinctive

At SSP America, we bring the latest, coolest, edgy restaurant experiences to airport dining. Our collection of local and boutique brands reflects today’s modern dining landscape, offering distinctive and dynamic restaurants that deliver a wholly immersive culinary experience and an authentic ‘taste of place.’ How? Our team is plugged into the pulse of the restaurant industry. We know how to bring streetside, airside. We know exactly what airports need and how to deliver, with creativity and flexibility. With our in-house brands, the answer is always “yes.” We blend global restaurant trends with the specific demands of travelers. The result? Multi-award-winning brands that elevate the passenger experience. Once a terminal hosts an SSP America local and boutique brand, it sets itself apart.

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SSP America’s Five ‘I’s— Investigate, Inspire, Improve, Innovate, and Implement—are collectively the methodology we use to propel the restaurant development process forward with our renowned passion. We begin by investigating the specific needs of each airport. Once we’re inspired, we collaborate to enhance, improve, and innovate our concept before putting it into action. When partnering with cool local brands, or crafting a boutique brand, we balance logic with creativity, delivering unique flavor and appeal. The result? Tailor-made restaurants that drive passenger satisfaction and award-winning results. Unlocking PASSION with the Five‘I’s

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16 CEOs Weigh In In a private roundtable discussion, the CEOs of seven leading concessions companies spoke with AXN’s Carol Ward and Melissa Montes about the state of the industry. 22 Employee Retention Airports aren’t always the easiest places to work, considering the complicated parking and need for background checks and daily security screening. Some airports are offering perks, including affordable childcare, to help keep workers committed. 28 The Industry’s Best Winners of the competitive and coveted Airport Experience Awards were announced at the recent Airport Experience Conference. Check out this year’s winners. 34 AXC In Pictures The Airport Experience Conference offered multiple networking opportunities. Relive some key moments with images from this year’s event. 38 Conference Highlights From the kickoff Women in Leadership gathering to the Directors Viewpoint panel, this special section of Airport Experience News features coverage of all the educational sessions at the recent AX Conference.

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6 Letter From The Publisher 7 Data Check

12 Director’s Chair Terry Blue took over from

former director Scott Brockman at Memphis International Airport at the start of this year. Now he’s putting his own unique stamp on the airport.

How people move throughout the world is changing due to artificial intelligence, according to new data from Teague. 8 Latest Buzz Passenger traffic is booming at Sarasota Bradenton International Airport. (SRQ). The airport is being expanded and new concessions added to help manage the increase.

55 Advertising Index 56 Before You Take Off

High school chefs got a first-hand look at the airport concessions industry at the recent Airport Experience Conference. Culinary students from four schools competed in an appetizer contest at the conference, allowing them to hone and showcase their skills.

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Craveable Cuisine Cool,

To make this happen, we concentrate on four main areas when developing our menus. • Geography: We ensure each dish reflects the local flavor and SSP America’s signature ‘Taste of place’. • Food Trends: We stay current with the latest trends while preserving the essence of each location. • Space Usage: We maximize our production capabilities by using available space efficiently, including our innovative ‘Core Kitchen’ equipped with state-of-the-art tools. • Restaurant Design: We create a clear vision of the restaurant’s value, atmosphere, and key messages.

Our aim has always been to provide genuine, delicious food for travelers. We bring the energy, creativity, and authenticity of the street to airport dining. Our commitment to showcasing the unique local flavors of each location is translated into cool, craveable dishes tailored to travelers’ needs that also boost sales and profits. While we stay updated on popular foods and trending dishes, our focus remains on honoring local cuisines and flavors. We want travelers to feel like they’ve arrived at their destination as soon as they step into the airport.

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

Introducing The New AXN Advisory Group As we embark on the next decades of Airport Experience News and the Airport Experience Conference, the AX Team has assembled a group of trusted industry colleagues to help guide our journey into the future. Our goal is to continue to offer meaningful and relevant content in the pages of AXN, in AX Conference sessions and throughout our suite of media products. The 10 individuals who will share their knowledge and insights over the next year are: MARCH 29 - APRIL 1, 2025 WASHINGTON, DC GAYLORD NATIONAL RESORT & CONVENTION CENTER AIRPORT EXPERIENCE CONFERENCE Kim Becker, San Diego International Airport Derryl Benton, Avolta Zenola Campbell, Dallas/Fort Worth International Airport Bryant Francis, Cleveland Hopkins International Airport Mark Gale, Fort Lauderdale-Hollywood International Airport

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 Emma Vail Marketing Coordinator

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

Eric Johnson, Nashville International Airport Roddy McOwan, WH Smith North America Pat Murray, SSP America

Gregg Paradies, Paradies Lagardère Kevin Westlye, High Flying Foods

We thank you for your insights and embarking on this journey with us. And, as always we welcome feedback from you, our valued subscribers, to ensure AXN and the AX Conference continue to be a connector for this dynamic industry.

CONFERENCE.AIRPORTXNEWS.COM

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WE MAKE THE journey AS exciting AS THE DESTINATION

Memphis Made Brewing Company Memphis International Airport (MEM)

The Green Room Lounge & Whiskey Bar Nashville International Airport (BNA) WINNER OF THE 2024 AX AWARDS FOR BEST BAR EXPERIENCE

To be a part of the travel experience revolution, contact Derryl Benton at Derryl.Benton@HMSHost.com

APRIL/MAY 2024

LETTER FROM THE PUBLISHER

Dear Valued Readers,

What a dynamic and invigorating event we all experienced with the 20 th Anniversary Airport Experience Conference just a month ago in Dallas. I’d like to extend our deepest gratitude to all who made the event a success, starting with our Airport Partners Dallas/Fort Worth International and Dallas Love Field, both of which hosted amazing tours of their airports that engaged, surprised, and delighted our attendees. We truly appreciate DFW, DAL and all our airport partners who bring so much to the annual event. Next, I’d like to thank our sponsors and exhibitors for their continued support and incredible showings in the experience hall, as well as the many networking opportunities their events provided – networking is truly the richest texture to our event and your partnership in achieving this is invaluable. And last but certainly not least, thank you to our valued subscribers and attendees who travel to AXC year after year to connect with their industry colleagues. In the following pages, you will see images of the people and events that make AXC a one-of a-kind event, a feature on our closed-door CEO roundtable and much more. Highlighted in our coverage is also a recap of the 2024 AXC Awards and all the finalists and winners. We are thrilled that the awards gala continues to be a pinnacle event at the Conference and would like to again congratulate all the outstanding winners. I would also like to take a moment to thank the awards committees for their support in voting and maintaining the integrity of our awards process. And in recognition of all who submitted for the awards this year, it is great to see the spirit of competition and collaboration alive in our industry. This issue also contains reporting on ways airports are helping to make working at the airport a more desirable prospect, as well as an interview with Memphis International Airport’s Terry Blue, an update on the expansion and renovation underway at Sarasota Bradenton International Airport, and more.

Enjoy!

Melissa K. Montes Vice President & Publisher Airport Experience News mel@airportxnews.com

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DATA CHECK

TRAVEL TRANSFORMATION How People Move Throughout The World Is Changing Due To AI, Report Says

BY CAROL WARD

HENLEY & PARTNERS 109

75% OF CONSUMERS SAY THEY HAVE BEEN INSPIRED BY SOCIAL MEDIA TO TRAVEL TO A SPECIFIC DESTINATION

THE AVERAGE NUMBER OF DESTINATIONS A TRAVELER CAN ACCESS VISA-FREE HAS NEARLY DOUBLED — FROM 58 IN 2006 TO 109 IN 2023

nvisible, intelligent systems deployed around us are making processes and systems more

Enhancing The Experience New technologies that utilize voice, audio and AR capabilities will reduce friction for travelers, the Teague report said, with operators seizing opportunities to deliver “relevant and inspiring in-the moment travel experiences.” Traveler pain points will also transform, with AI-driven systems at analyze cross-platform insights helping to ease network congestion and delays. “Not only will this help to make journeys smoother, it will also reward customers and operators with that all-important commodity: time,” the report noted. AI and machine learning will also aid in digitally curating dream destinations and trips, the Teague report predicts, cutting through overwhelming volumes of content by turning to “travel AI-dvisors”, or digital curators that navigate through content to suggest the perfect destination. The impact of journey disruptions will be minimized as AI allows for quick and seamless changes as needed. Moving forward, AI and machine learning will touch virtually every aspect of the traveler journey. “As we look toward 2030, we see more and more travel brands and operators harnessing the pawer of incoming technology to embrace complexity and collaboration,” the report said. “By doing this, tomorrow’s services, systems and networks will become resilient and interconnected, while creating more intuitive experiences for travelers.”

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AMERICAN EXPRESS

intuitive, shifting the passenger journey to a more personalized experience, according to a new report from design consultancy Teagu e. In its latest report, Future Mobility: Insights On Travel In The Age of AI, Teague examines how the combination of omnipresent technology and a fresh generation of travelers will bring myriad opportunities for tech-forward travel experiences. About 800 million people used travel apps in 2022, the report noted, and those actions are delivering vast amounts of data on how people engage, book, use and move between locations. Harnessing the data and using it to digitize travel and mobility touchpoints can improve efficiency and security, the report noted. Tech adoption is most prevalent in new generations of travelers, and their numbers have ballooned due to a combination of tech diffusion through affordable devices, internet penetration and expanding middle classes. Those new consumers put pressure on travel infrastructure but are also helping to usher in a new age of tech-aided travel. “Whether they’re booking a trip, breezing through airport security or navigating a new city, AI is helping to hyper-personalize every moment of the customer’s journey,” the report said.

INTERNATIONAL TRAVEL DEPARTURES WILL HIT 1.5 MILLION BY 2025, REPRESENTING AN EIGHTH OF THE WORLD’S CURRENT POPULATION 1.5M “By 2025, six generations of people will traverse the world, each with their own travel needs, habits and accessibility requirements.”

GLOBALDATA

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LATEST BUZZ

TERMINAL REFRESH A Five-Gate Expansion And New Concessions Are In The Works For SRQ

BY SARAH BELING

Concourse B Holdroom Realignment

FACADE

ost-pandemic travel is booming in Florida – and not just in the state’s largest cities. Over at Sarasota

and refurbished concessions concepts, an outbound baggage handling system with new screening equipment, an expansion of the airport’s airfield ramps for air carrier parking, a new cell phone lot and vehicle parking lots, a repaving of the taxiway as well as a new observation area on the east side of the airport for the community to watch planes take off and land. While the phases of the project started at “various stages” over the last 18 months, says SRQ president and CEO Fredrick J. Piccolo, most initiatives will be completed between early fall and the end of 2025, he notes. When it comes to the airport’s concessions program,

Above: Sarasota Bradenton International Airport is in the midst of a $200-million dollar terminal expansion project that includes a new five-gate terminal, security checkpoint, new and refurbished concessions concepts and other improvements.

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Bradenton International Airport (SRQ), passenger numbers have grown over 200% since 2018, leading the Gulf Coast airport to expand and refurbish its existing facilities in a fast-moving, approximately $200-million dollar terminal expansion project. Having nearly doubled its airlines and quadrupled its nonstop destinations in the last five years, SRQ is making room for further growth with a terminal expansion project that includes a new five gate terminal, security checkpoint, new

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CONGRATULATIONS TO ALL THE WINNERS! from

BEST LOCALLY INSPIRED STORE LARGE AIRPORTS

LATEST BUZZ

“We just awarded new concessions contracts — coincidentally, they were expiring in the next year,” he explains. The program, which will be operated by SSP America , Paradies Lagardère and Mitchell Management , will feature a variety of concepts. Mitchell Management will operate fried chicken specialists Huey Magoo’s. SSP America will operate the popular Wahlburgers burger chain; local brand Patricks 1481, a tavern concept; Anna Maria Oyster Bar, a local seafood restaurant; Motorworks Brewing; Sarasota-based Rise & Nye’s, which is staffed by Floridians with intellectual and developmental disabilities; Peet’s Coffee and retail concepts the Shoppes at Siesta Key and Sarasota To Go. Paradies Lagardère will operate Mattison’s City Grille, an upscale restaurant featuring American, Mediterranean, Asian, Caribbean and Italian cuisine; Dunkin’ and Starbucks as well as retail concepts Seaside Mercantile and Suncoast Trading & Bar.

“This is the first time that we’re getting these local restaurants to participate under the master concessionary agreements, because our growth has made it economically feasible,” says Piccolo. “We’re really happy about that, because it gives local businesses buy-in to the airport, and also exposes those local restaurants to people coming to visit. so that when they leave the airport, if they like our experience here, they might patronize one of the establishments that they have in the rest of the community, whether it’s Mattison’s, Patricks or Anna Maria Oyster Bar,” he adds. Other Amenities Passengers will not only be able to enjoy Sarasota’s cuisine but will also be able to take in stunning airport views, notes Piccolo, adding that part of SRQ’s renovations include a large glass atrium looking out onto the airfield. “Both Patricks and Anna Maria Oyster bar will be right

in that area, so when you’re sitting there enjoying a meal or a drink you’re going to be able to watch the aircrafts and see the whole airfield as you sit down.” Another vantage point to watch incoming and outgoing flights will be SRQ’s 15th Street observation area, coming in at $2.2 million of the project’s overall budget in costs shared by the airport authority and Manatee County Government. The observation deck, built in collaboration with Sweet Sparkman Architecture & Interiors and Stellar Development is designed “to reimagine a makeshift space currently used for plane spotting into a programmed observation area,” says Sweet Sparkman’s Todd Sweet. Creating “an immersive aviation experience for both enthusiasts and the general public,” the observation area features an aluminum shade canopy wing with anti-rain barriers for plane-spotters to protect themselves from the elements. The wing will also be adorned with airport informational signage, educational displays, and historical background on SRQ.

Ground Boa

CONCESSIONS MALL

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LATEST BUZZ

Left: SSP America will operate a range of concepts at the renovated SRQ, including local brands Patricks 1481, a tavern concept, and Anna Maria Oyster Bar. Below: Paradies Lagardère will operate Mattison’s City Grille, an upscale restaurant featuring American, Mediterranean, Asian, Caribbean and Italian cuisine; news and gift concept Seaside Mercantile and other concessions locations.

arding Facility

Visitors will also be able to enjoy a family-friendly playground, listen to radio communications between pilots and air traffic control as well as take a closer look at one of the airport’s retired beacon lights previously used to identify SRQ to inbound pilots. “We hope the area becomes a favorite place for citizens and families to enjoy plane spotting and recreation,” says Sweet of the new facility. Piccolo agrees. “The new observation area,” he adds, “will be a community asset that aesthetically enhances the entrance to Manatee County, showcases the SRQ airport, and provides inspiration to those dreaming of travel or pursuing a career in aviation.” The airport is also overhauling its entire power plant system, says Piccolo. “The cooling towers were 30 years old so all that is being redone. We are adding one additional energy efficient chiller [and] adding new natural gas lines that allow for cooking, as before [they were] electric,” says Piccolo. “It’s all modernized and should be much more efficient and last longer.” To foot the $200 million-dollar undertaking, the airport used a “variety of sources” for funding, says Piccolo. The Bipartisan Infrastructure Bill provided approximately $34 million towards the terminal expansion, as well as $18 million in entitlement from the Federal Aviation Administration’s AIP grants (with $6 million a year allocated to SRQ based on passenger numbers), $29 million in funds from the Florida Department of Transportation’s Work Program, $21.5 million from the state legislature, $23 million from TSA, and additional financing from the airport authority’s internal funds. “We’re pleased that we’re doing $200 million worth of work that we don’t have to incur any debt for,” says Piccolo. “We are a debt-free airport right now.”

SRQ is not only staying debt-free — their current facility improvements will add massive revenue to the region’s coffers, says Piccolo. “There’s about $3.2 billion a year and 23,000 jobs in the community derived from airport activities. We’re an important economic generator here, and I like to say, we do it at no cost to the community because we don’t have any taxing power, [costs are] a little over $5 per passenger. So we’re very cost effective for the airlines as well.” And if recent studies on economic impact, like the Florida Department of Transportation’s 2021 survey of its airports are any indication — showing $336 billion in total economic impacts to the state’s economy, supporting over two million jobs, $109 billion in payroll, and $170 billion in value added — Sarasota and the Sunshine State at large will only continue to see more travelers. SRQ will be ready for the next surge, says Piccolo, adding that “each construction project currently underway at the airport is extremely important to support our continued growth and provide the level of customer service and amenities our passengers expect. We pride ourselves in providing a convenient, stress-free travel experience to the local community.”

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DIRECTOR’S CHAIR

MEM REINVENTION CEO Terry Blue Is Steering The Next Phase of Development For Memphis International Airport

BY CAROL WARD

ver the past decade, Memphis International Airport (MEM) has meticulously rebuilt its presence,

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transitioning from a hub airport to an origin and-destination facility. One of the largest cargo hubs in the world, MEM is now settling comfortably in the small/medium sector of passenger airports in the United States. Longtime CEO Scott Brockman, who led the airport through its tumultuous post-hub reinvention, retired at the end of last year, and former COO Terry Blue took the helm at the start of 2024. Now as CEO, Blue is taking on the next phase of redevelopment – a terminal upgrade – while witnessing growing passenger demand. AXN’s Carol Ward spoke with Blue about his vision for MEM going forward. WARD: You were tapped to take on the leadership role at MEM about a year ago as longtime director Scott Brockman was preparing to retire. Now you’re steering the ship on your own. Can you share your experiences during the transition? Tell me about that transition and how it’s gone so far. BLUE: Scott is a planner’s planner, and he had his own personal timeline in mind. He was working with the board on a transition plan that was going to take X amount of time, whether it was an internal candidate or an external candidate, there would be a certain amount of time needed for a handoff. The board put me through a process to make sure that they believed that I was the right candidate, and fortunately they did.

Left: Terry Blue, president and CEO, Memphis-Shelby County Airport Authority, which oversees Memphis International Airport.

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Right: Memphis International Airport’s modernized concourse opened in February 2022, bringing an open, airy feel and modern conveniences to travelers.

Left: HMSHost Added Corky’s Ribs & BBQ to its Grizz Grill offerings, responding to passenger demands for local barbeque.

Below: Paradies Lagardère offers self-checkout in select MEM locations, which Blue says is popular with travelers.

Bottom: Memphis Made Brewing has become a traveler favorite since it opened in the new Concourse B two years ago.

other members of the executive team engaged. Of course, he was the one making decisions but there were no surprises. I feel like I’ve just been handed the baton and I’m not making the left or right turn. I’ve got the next leg of the race. The goal and the vision have been established. We just finished a master plan that charts the next 20 years of what we need and what those timelines are. Now it’s my job to work with the team to deliver on that pitch. With this organization, Scott handed me the keys to a Ferrari. I just got to keep it performing at a high rate, and if I can squeeze a few more RPMs out of it, I’ll do my best to do so. WARD: I know your passenger traffic grew substantially last year. How are things going this year, in terms of both traffic and routes? BLUE: We did have a significant increase year over year last year - we grew 10% over 2022, which put us 3% above our previous origin-and-destination high water market of 2019. Of course, Memphis was a northwest hub 10-plus years ago, but that doesn’t figure into today’s calculations. We have a new, modern-era record of 4.8 million passengers, and we are extremely optimistic about what 2024 is going to bring us.

Scott was never one to throttle back. That’s not in his DNA, so he was going to be 100% full steam ahead until his last day. And to his credit, and that’s exactly what he did, but instead of being the COO, I was COO and CEO-in-waiting. Working with him on everything, he wanted to make sure that I was on board with what he was about to do. Then came process of trying to find my successor. Scott’s timeline that he had always envisioned was that when he walked out the door, that the organization was set from a leadership standpoint. That began the process of finding our next COO. We went through a recruitment process and found Marshall Stevens from Harrisburg, Pennsylvania, who joined us in October. I was given the president’s role November 16 , and then CEO role was added at the first of the year. WARD: Does your vision or your style differ from what Scott Brockman had? BLUE: Scott is just larger than life - he’s a big, loud voice. He’s so well known in industry and has accomplished so much. I have the utmost respect for Scott, and it was a privilege and pleasure to work for him. My style is a bit different, not right, wrong or otherwise. Regarding the vision, Scott was outstanding about having me and the

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DIRECTOR’S CHAIR

Left: Capturing enthusiasm for whiskey and local products, the Distillery District store at Memphis International offers travelers a taste of hometown specialties.

WARD: I know you just finished a new concourse. What’s next for MEM capital projects? BLUE: Going back to that hub three decades ago, Memphis had three post-security concourses During our modernization effort, we consolidated down to a single concourse: Concourse B. That concourse was rebuilt, modernized higher ceilings, wider floor square footage, and more gates and opened in February 2022. Now we’re looking our terminal building - this was one of the main items that came out of our master plan, The original terminal building, I think it was commissioned in 1962. OF note, the city of Memphis is in the Madrid seismic zone. The New Madrid fault is about 90 miles away in Madrid, Missouri. Seismic code was not a thing 60 years ago when our building was built, so we need to seismically retrofit. The building also didn’t have fire suppression sprinklers. Furthermore, the building was built for a time when passenger aircraft had propellers on them and flew maybe 40 passengers each. SO there are times of the day where our building feels quite small and it doesn’t flow like a modern terminal building does. We lack some of the modern passenger processing amenities, like an inline security screening system. We have several reasons to tear into this building and we anticipate breaking ground on that project later this spring. Right now, it’s looking like it will take about eight years and $665 million. WARD: Moving into the concourse, let’s talk a little bit about concessions. How are concessions performing and what’s new with your program? BLUE: We are blessed to have two great master concessionaires. Our food and beverage prime partner is HMSHost and our news and gift prime partner is Paradies Lagardère . Each, of course, has several local ACDBE partners as well. Our annual spend per passenger is hitting record levels right now. For calendar year 2023 we’re at $10.89 – that’s more than a 13% increase over 2022.

thought that since most of the people coming and going either live here and get barbecue whenever they want, or they have visited and probably eaten barbecue two or three times already. But after we opened the Concourse, it was the number one thing we would hear about. One of the big brands here in Memphis is Corky’s. We partnered with HMSHost and they’re now offering Corky’s Memphis barbecue in one of their stores. WARD: Are you implementing any new technologies or any other sort of customer facing things that would enhance the passenger experience? BLUE: Paradies offers the self-checkout. Passengers seem to love the open concept and it blends very well with our modernized concourse. We have not talked about any of the remote ordering or the waiter-style service to the gate, but that is certainly not off the table. Our mission statement is the positively memorable travel experience. Our partners are on board with that and helping us deliver if it’s deemed that it’s going to be a value and something the passengers would want. At the moment, it doesn’t seem to be on the top five or top 10 list of passenger wants.

Some of that is due to some new offerings that have opened here in the last year. In 2023 we opened a Chili’s, an Omega Bodega and Rambling Joe’s Coffee Shop as well. The consolidation of our concession program from three concourses down to one, where all the passengers are, coupled with an increase in total number of passengers and coupled with new offerings, [has been beneficial]. The food and beverage side is doing outstanding, as is the news – we could not be happier right now with our partners. [One notable concept] is the Distillery District store by Paradies Lagardère, where they’re selling packaged Tennessee whiskey and [other products]. It’s very successful – we wondered a bit, but somehow it’s happening. WARD: With the single concourse, is your concessions program now right-sized for success? BLUE: When we opened the new concourse, one of the things that maybe we underestimated was the demand for Memphis Barbecue, specifically in the building. We have some of the best barbecue in the world, and being an origin destination airport, everybody has their favorite hometown shop. We honestly

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AX NEWS APRIL/MAY 2024

REVOLUTIONIZING TRAVEL RETAIL

Civil Rights Trail Market Birmingham-Shuttlesworth International Airport (BHM)

WINNER OF THE 2024 AX AWARD FOR BEST LOCAL INSPIRED STORE, MEDIUM SMALL AIRPORTS

To be a part of the travel experience revolution, contact Brian Qui n n at bquinn@hudsongroup.com

Seven Industry CEOs Share Insights And Challenges In Roundtable Discussion

BY CAROL WARD

Editor’s Note: In the midst of the 2024 Airport Experience Conference, behind closed doors, seven CEOs from leading airport concessions companies joined AXN’s Carol Ward and Melissa K. Montes for a roundtable discussion. The conversation centered on the key challenges operators are facing amidst high labor demands, skyrocketing construction costs and other operational issues weighing heavily on profit and loss statements, but also included assessments of new technologies and new approaches that could enhance the traveler experience. Participating in the conversation were Carlos Bernal, CEO of Areas USA ; Tom Fricke, former interim CEO of OTG ; Steve Johnson, president and CEO of Avolta in North America; Toby Keir, CEO of WH Smith North America ; Gregg Paradies, president and CEO of Paradies Lagardère; Scott Socha, group president for Parks and Resorts, Travel and Australia at Delaware North ; and Michael Svagdis, CEO of SSP America . The following is an edited version of the conversation.

Above: From left to right: Gregg Paradies of Paradies Lagardère, Toby Keir of WH Smith North America, Scott Socha of Delaware North Travel, Melissa K. Montes of Airport Experience News, Carlos Bernal of Areas USA, Steve Johnson of Avolta, Tom Fricke of OTG, and Michael Svagdis of SSP America.

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WARD: When we met last year, one of the biggest points of discussion was labor challenges, in terms of both a limited labor pool and the rising costs of labor. Can you update me on the latest key issues surrounding labor? BERNAL: During Covid and coming out of Covid, recruiting and staffing and getting [concessions locations] open was significantly challenging, and that created some wage pressures. On the staffing and recruiting side, I think it’s getting a little easier. Now our challenge is affordability. The union component and how expensive labor has gotten with living wage ordinances – these are really making it tough for us to be able to afford to be in the game. I’ve never seen anything quite like it – the demands that are being placed in our companies to provide these wages and benefits and everything else … without any modification or changes to the existing contracts. We’re being uber cautious as we’re looking at opportunities. It’s got to make financial sense for us. If [airports] want labor peace – if they want certain wages and they want certain benefits – they really have to adjust the business model to allow us to compete and do business in these cities. PARADIES: Labor costs have gone up significantly. For the first time – and I’ve been with the company 36 years – we exercised an option and, once a new labor agreement got pushed upon us, we rescinded the option. We did the math and it didn’t work. Maybe in 2019 we would have done something differently, but today we don’t need to have loss-leading operations. I think we’re all being more disciplined as to how we approach matters. If we can’t operate our brand as we need to, we’re not going to be in that market.

Above: Carlos Bernal of Areas USA said his company is being “uber cautious” when assessing new opportunities due to the escalating cost of operating in airports.

“I think we’re all being more disciplined as to how we approach matters. If we can’t operate our brand as we need to, we’re not going to be that market.” – Gregg Paradies, Paradies Lagardère Our average participation rate on union health care is about 42% – that percentage of employees would take the benefits. My question to unions is where does the rest of the money go? We’re paying for benefits that SVAGDIS: I think the airport administration, the city council, the mayor’s office, all need to become better educated on the unions. I understand the push for wages to a certain extent, but I scratch my head when I look at things that the unions are asking for. They want health care benefits, which we offer the same that I get as the CEO of a company. They want us to cover 100% of the cost, which I pay out of pocket. But they also want us to give it to every employee, every union employee, even if the employee doesn’t take it.

Above: Union challenges were top of mind for most CEOs, including SSP America’s Michael Svagdis, who outlined myriad demands from union officials that weigh heavily on the operators’ ability to be profitable.

employees aren’t taking. The money goes to the unions. They want us to contribute to their pension plans but we have 401K that’s just as good as the pension plan…. If I’m an employee on a union pension plan, and I leave before five years or ten years, I get zero from the pension plan. Where does that money go? With us, if they leave within a year, they take their money and they take the match. The next thing is, if we keep raising the hourly team members wages, we get a compression. Now they’re getting paid as much as our supervisors and close to our managers’ pay level. We have to give them increases to create a proper gap. It’s just one thing after another. They want us to pay for legal funds for employees. Then there’s a training fund but I’m not seeing the training being done. All these things other than wages are just piling up one after another, and it’s very, very difficult to run a business and be profitable.

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Left: Operators are overwhelmed by the huge number of RFPs scheduled to come on stream this year. Avolta’s Steve Johnson suggested airports should hold off on issuing new concessions RFPs for at least two years.

KEIR: With the union, the thing I struggle with the most, on top of the cost and affordability, is that we lose the direct relationship with our colleagues. It’s hard to have a clear conversation about how this business operates and how we can work together to serve the customer. Having that third party slows things down, and not always to the benefit of the employee. FRICKE: As somebody who has been gone for ten years and has come back, I’m surprised at how fragile the PnLs have gotten. I never felt the pressure, when I was at HMSHost, on street pricing and in the monitoring of street pricing. At the same time, rents are going up. And on top of it, not only do you have union pressure, but we’re in airports where the cities are mandating breathtaking increases [in wages]. WARD: So what what’s the answer? As the seven key operators in our industry, is this an individual effort or a collective effort? And who do you need to influence - the airports, the cities, the unions themselves? JOHNSON: All the above, really. [The current environment] is unsustainable in the industry. We’re talking about major cities, and I’m not

sure who’s going to operate there. With the number of RFPs that are on the street and the union involvement in most of those RFPs, I think you’re going to see – and we have seen – no bids. That’s our reality. I don’t think that the airports have understood the dynamic change that’s happened after Covid. We’re seeing a little bit longer term, but we’re seeing the same exact same metrics they used to have, without a look at pricing, without a look at rents, without a look at the term and without [addressing the challenges with unions]. I’m not sure how sustainable the industry is right now. SVAGDIS: We’re talking about RFPs but the existing business is just as bad, and we’re struggling. I’m sitting here on behalf of 61 joint venture partners I have today. It’s not just the primes. I have a significant number of joint venture partners and their financial wealth and well-being is on the line. BERNAL: To answer the question, I think it’s a collective effort – it’s ARRA, its AXN, it’s AMAC, it’s ACI, it’s AAAE, it’s all of us here. We’ve got to get the messaging and drive it home to all the stakeholders. And ultimately, it’s the airport, but it’s really the mayors, the

Above: Toby Keir of WH Smith North America said despite myriad challenges, the fundamentals of the U.S. market for airport concessions are strong, with rising passenger numbers and unprecedented capital investments by airports.

city council – that’s who’s driving the bus in these cities. FRICK: We hope they’re getting the message, because I know there are RFPs that nobody responded to. For the first time in my career, we walked away from an extension offer. I hope it is giving [airports] pause – they’re seeing behavior that they’ve just never seen before. PARADIES: Absent the union issue, when you look at where we were in 2019 and where we are today, there has been some progress in some airports. We’ve seen some of the street pricing adjusted because [the airport] trusts us that we’re not gouging. A good example is Phoenix. They went from a very strict street pricing to no pricing [restrictions]. The competition manages the program. Nobody is abusing it. SVAGDIS: If you think about what we need, we need longer term, we need flexibility on pricing, we need support as it relates to the unions when they have unrealistic asks. But we also need realistic expectations on capital spending. And something we haven’t talked about in a while is logistics charges – a charge for this, charge for that – and our PnLs are getting tighter and tighter. It’s almost like an additional rent.

“With the number of RFPs that are on the street and the union involvement in most of those RFPs, I think you’re going to see – and we have seen – no bids. ” – Steve Johnson , Avolta

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KEIR: But there is good news in that the fundamentals in the U.S. market are strong, with passenger numbers and huge investments. We all see the benefit of airports improving the passenger experience. We are all a huge part of the experience. We all would like to have a growing business. If we turn things down, there’s a clear reason, and something needs to change. JOHNSON: From a global company’s perspective, there are better places in the world to invest. Every airport has value but we have to make the economics work. There’s only so many levers we can pull. We have to pay for labor and we have to pay for the cost of goods. Rent can be variable. Pricing can be variable, and term can be variable. Those are the three things [airports] can control. They can look at those three things [and assess how they can] make this the most economical. Then if things pick up, they can build in their own upside, without killing us in the beginning. WARD: Turning to technology, what’s exciting right now in terms of technologies that can improve the passenger experience? JOHNSON: Self-checkout retail is a winner. It’s good for the consumer, they love it and the lines go down in the store. In some locations, 60% or 70% of our sales are coming through self-checkout. The younger consumers are certainly adopting it. They’re adopting QR codes and using them to order and pay. We went from 0% of our business to almost 25% of our business coming through QR codes. SVAGDIS: In every one of those technologies, we’re seeing a higher average ticket as well, because 100% of the time [the system] upsells. BERNAL: Is Amazon Just Walk Out working? PARADIES: Many of our companies have used it to win a contract, but there hasn’t been any data to really support it. Going back to what’s working, if it’s working on the street, its working in the airport. If it’s not on the street – Amazon Just Walk Out is not any place on the street – it’s not working at the airport. JOHNSON: We have we have probably 50% that do well. It’s all location driven and it’s counterintuitive to what you think. We believed Just Walk Out would work in high volume locations. Where it works, however, is down concourses where there’s nothing else. MONTES: What do you want to see in airports that isn’t there now. SOCHA: A bit more on the experiential side. It’s certainly in some airports, but in others … it just gets left out.

“We need longer term, we need flexibility on pricing, we need support as it relates to the unions when they have unrealistic asks. But we also need realistic expectations on capital spending.” – Michael Svagdis, SSP America

MONTES: There was quite a bit there, but what other challenges are keeping you up at night? JOHNSON: CAPEX. There’s a limit on the amount of money each of our companies can spend. [There’s a large number of] RFPs coming out all at once this year. In the New York market alone, the cost for labor to build went from about $700 a square foot to $1,100 a square foot in about two years, and that’s just for labor alone. That’s what we’re all facing, and that’s why we’re being selective. I mean, at some point the airports have to recognize they may put something out and nobody shows up. KEIR: The escalation has been huge, and I just can’t see it slowing down. And why is it such a difference between airport A and airport B, [in areas with the same] cost of living? It’s doesn’t make any sense. PARADIES: And how many general contractors are bidding on opportunities versus what you had five years ago. Today you might get one. JOHNSON: Think about all the infrastructure money that’s been brought into airports,

federal money. When all that work is being done in an airport, we’re using the same contractors, so the contractors can [demand] a 40% premium. Airports don’t understand what they’ve created, this closed marketplace – many airports make you use their contractor. We’re in an interesting period right now. If I were an airport, I wouldn’t put an RFP out two years, I would step back and say, let this season be done. WARD: Ten airports presented in the Airport Opportunities session here at the conference, and that’s just scratching the surface. Even if the numbers pencil out in your favor, for many companies it’s not fathomable to bid on all these all at once. As the industry’s biggest players, are you having to be more selective? SOCHA: We’re not in the same financial markets that we were in five years ago, three years ago, ten years ago. The cost of having access to capital is different and it’s hard to see it going back to that place in the near to medium term.

Left: Airports should consult with concessionaires before planning a concessions overhaul or new program, Tom Fricke of OTG suggested.

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FRICKE: Before an RFP comes out, airports should sit down with us. It has to makes sense. SVAGDIS: I’ve seen in multiple bids – speaking specifically for food and beverage– with too many restaurants and too many lounges. They’re our direct competitors. It’s just taking business away from us. which leads to overdeveloped programs. We all know how much food and beverage [an airport] should have. How much retail – we know because we do retail in other countries. We know what food and beverage should sit next to what retail. [Airports should] allow us to give feedback on their RFPs. Get all the feedback… and I guarantee [the advice from each company] will be pretty much the same. What airports will get is competitive rents. It’s a crazy ask, but that would be fantastic. BERNAL: To that point, the thing I’d like to see change is the perception – that the airports have and the consultants have – that we’re making a ton of money. I think there’s a lack of trust. It’s [important to] get in front of the RFP and talk about it. It’s going to be the same for all of us – [sharing] what the real numbers look like. We’re all going to innovate. We’re all going to try something new. We’re going to create experiences. We’re going to do that because that’s who we are as businesses and leaders, but we can’t do those things sometimes because the model causes the problem today. PARADIES: I’d like to see more data-based decision making. Let’s use data to make decisions, whether it be pricing, whether it be store hours, whether it be what you sell… MONTES: Most of you are members of ARRA. How have the organization’s goals shifted since its launch four years ago? BERNAL: I’ll tell you what was accomplished. The only reason we have CRRSAA (Coronavirus Response and Relief Supplemental Appropriation Act) money today is because of ARRA. That’s $800 million – it’s a big deal. Then there was $200 million in reimbursements to some of

“The thing I’d like to see change is the perception – that the airports have and the consultants have – that we’re making a ton of money. ” – Carlos Bernal, Areas USA the concessionaires and our partners. The focus now is all the things we’re talking about today. We need to get behind that, and we need to tell our story. For me, that’s the single most important component of the work that we need to get done, because we can’t do it individually as a company. JOHNSON: The subjects may change, whether it be on capital or term or rent or pricing or logistics. It’s ARRA’s job to inform and educate the airports. We can’t do it, [airports] don’t believe us independently, they think that we’re trying to game the system. We need an impartial third voice to be able to continue the discussion.

Above: Gregg Paradies, president and CEO of Paradies Lagardère, wants more data-based decision making from airports regarding things like store hours, pricing and product.

Right: Delaware North’s Scott Socha said the cost of accessing capital has increased significantly, forcing concessionaires to be more selective in how and which RFPs make sense for their businesses.

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With Childcare Help And Other Perks, Airports Are Going The Extra Mile To Retain Employees

BY SALLY KRAL

In 2021, Kelowna International Airport (YLW) conducted a childcare needs assessment for airports employees, the results of which affirmed a clear demand for childcare assistance. Out of 105 respondents, 69 indicated that they either have children or plan to have children in the next five years, with 27 stating an immediate need for care. “We learned that childcare availability is a primary driver for airport campus staff to be able to remain at or return to work at the airport,” says airport CEO Sam Samaddar. “The Kelowna Airport YMCA Child Care project was conceived to address these critical needs, aiming to provide reliable and quality care for children in a new, conveniently located facility.”

Right: Following a 2021 childcare needs assessment Kelowna International Airport determined that access to affordable onsite childcare was a top priority for its employees. In response the airport opened its Kelowna Airport YMCA Child Care Facility on airport grounds last fall, with 86 spaces available for children from infancy to 5 years of age.

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