Airport Experience® News - Retail & Services Issue 2025

strategies to stave off cost increases in recent years – 80% on some inputs since 2019 – some of which have become standard and others that have been put in place to adapt to current uncertainty, says Shawn Lauria, vice president of construction and procurement. Design simplification is one starting point. With a focus on the customer experience, the company will define true necessities for a positive experience on both buildouts and interior designs, he says. “All of our efforts are done without sacrificing any level of quality of our operations or service and experience for the traveling customer,” Lauria says. Standardization of design allows for more efficient planning and execution. And the company is forecasting out further than normal. “Purchasing volumes allows for smarter spending, leverage of markets and shorter lead times,” Lauria says. Worst Yet To Come While Bambuza and other operators say tariffs have slowly started driving costs up, they haven’t seen a massive impact just yet. That’s because a lot of the inputs involved in projects taking place right now or breaking ground in the near future are already under contract, says Ramesh Nair, senior cost consultant at Vistara Construction Services.

Often times, local rules and regulations or contractual elements that are in place don’t necessarily allow airport clients to pivot swiftly. He points to supermarkets on the street raising prices to account for supply and demand. Airport pricing mechanisms don’t allow that same response, McOwan says. “It’s not the optimum solution in a volatile market,” he says. “Inflation is inevitable. You will see elements passed on to the consumer. The question is, what can we do individually as an operator and what can we do collectively as an industry [regarding] speed of decision making and creating an environment where concessions have the ability to move quickly – with airport approval.” Internally, WH Smith has reviewed its supplier base, moving away from some markets that are more volatile, and sitting down with brand partners to explore different product ranges, including decreasing sku counts in stores. “That might lead to a bit more consolidation,” McOwan says. “We’re also looking for alternate brands and products … and looking to offer the customer more choices at various price levels, so you’re allowing the consumer to make a decision.” Planning Underway Paradies Lagardère is working internally and with its suppliers to mitigate most of the impact of tariffs so far. But the company has also implemented several

Vistara, he says, has spent several decades building relationships with industry partners and building cost estimation databases using a variety of economic factors, escalation trends and relationships with contractors since the 1990s. In rational economic times, he says, it’s easier to predict what a project will cost even into the future. Thus tariffs, which are having some, but minimal, impact on costs now, are the latest input creating incredible uncertainty for the future – making it increasingly difficult to price projects planned for two or three years down the line. “We have seen prices on steel escalate 40% since 2020,” he says. “We were pricing steel at one time at about $4,000 a ton. Now you’re lucky if you can get it at $7,300. These numbers are jumping pretty significantly and they aren’t coming down.” Copper is another volatile import. The demand has gone high because of its use in electrical components. There’s been a rise of between 10% and 15% in recent years. “But if I were to say, ‘I’m looking at a project three years from now,’ every contractor is going to tell me I can’t tell you the number three years from now,” Nair says. “You can’t use the 10% annual inflation rate for steel or copper because they’re going to say, ‘We just don’t understand what’s going to happen – there’s too much uncertainty.’ Markets hate uncertainty.” Ultimately that’s going to force airports to either increase their budgets or cut back on projects, he says. “Right now, since there’s no money getting into the system, most architects are being forced to redesign and make buildings smaller,” Nair says. “It’s become a big challenge for us in some of our long term projects.” Add in “Buy America” clauses that require purchasing American components but don’t guarantee quality, often leave fewer choices on the table. Joe Allen, senior associate at Alliiance , and Eric Peterson, president at Alliiance, say options are decreasing.

Left: Some inputs have increased 80% since 2019 for Paradies Lagardère, which is working on strategies to mitigate tariffs and other costs. Design simplification, while maintaining customer experience, is one strategy.

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AX NEWS SEPTEMBER 2025