Airport Experience® News - Post-Conference Issue 2025

sales now approach 80% of traditional concessions revenue, while specialty retail’s share has declined nearly 50%, he said. “Our partnership needs to catch up to this reality,” Weddig said. “We’re still building programs that are very much like they were in 2011… we put in a lot of specialty retail because that’s where the incremental dollars were….That’s no longer true.” The changing spending trends have created a mismatch between space usage and retail’s diminishing value, Weddig said. Complicating the equation, labor costs have starkly risen, noted David Bissett, chief development officer for Paradies Lagardère . Bissett’s data – not adjusted for inflation – showed wages have nearly doubled since 2019 in some West Coast locations. Some regions saw compound annual growth rates of up to 11% while others experienced around 5-7% yearly, Bissett said. “We believe employees deserve fair wages and a high quality of life,” Bissett emphasized. “Simply put, the model doesn’t work.”

The increased costs and retail changes also come amid an influx of RFP opportunities, more than most companies may be able to handle, Bissett said. To illustrate, he said Paradies Lagardère, which operates around 850 retail locations and 170 dining options across more than 100 airports, passed on 38% of applicable airport RFPs last year due to financial concerns and timing constraints. To address the economic pressures, some airports have extended contract terms, with many now up to 15 years for food and beverage and 10 years for retail. But operators cautioned that longer terms alone aren’t enough. “Term can’t overcome what’s happening,” explained Pat Murray, CEO of SSP America. “There was a time when spending $1,000 per square foot building something would sound completely outrageous. There are many people building something in New York City right now at $3,000-3,500. You’ve reached a plateau that no longer makes sense.”

Bissett presented financial models showing how longer terms maintain the same internal rate of return on capital but extend payback periods. Before the coronavirus pandemic, RFPs typically had profit rates around 10%, he noted. Last year, rates were around 6-8%. “You’re getting your return on capital over time, but the inherent profitability per year has gone down,” Bissett said. For small concessionaires, extended terms create additional obstacles, Weddig pointed out. “If you’re not getting your payback for eight years, that’s a tough sell to a bank. It’s like, ‘I make nothing for eight years. Trust me.’ — I don’t think so,” Weddig added.

Below: Moderated by Michael Mullaney of Landrum & Brown, the panelists on the operator side were David Bissett of Paradies Lagardère, Pat Murray of SSP America and Andrew Weddig of the Airport Restaurant & Retail Association.

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AX NEWS MAY 2025