Airport Experience® News - Post-Conference Issue 2024

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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AX NEWS APRIL/MAY 2024