USA. In big breaking news, DFS is set to retain San Francisco International Airport’s duty free and luxury stores concession, subject to board approval.
A spokesperson told The Moodie Davitt Report, “We issued notice today [9 November local time -Ed] that DFS Group had the most responsible and responsive proposal. As of right now, we intend to seek award of this lease at our 12/5/17 Airport Commission meeting.”
There, the proposed award will be subject to the ratification of the San Francisco Board of Supervisors.
The award, if concluded as expected, represents a crucial win that will feel every bit as good as a new contract gain for DFS, the long-time incumbent at the key US West Coast gateway.
For DFS, the retention stakes couldn’t have been much higher, nor the taste of success any richer. The LVMH/Robert Miller-owned travel retailer faced red-hot competition (see table below) for one of its key concessions. San Francisco International Airport attracts heavy North Asian traffic and spending. A long ‘who’s who’ list of international and regional travel retailers expressed initial interest before four companies tabled proposals. Of these, three made the final cut with DFS’s being judged the best.
The contract covers the management and operation of ten duty free and luxury store locations in the international terminal and one in T1. The base term is 14 years, plus up to 365 days for construction of tenant improvements. An automatic extension period will be available to the tenant, if necessary, to ensure that the majority of premises in a new central retail plaza (if constructed) are operational for a full five years.
DFS Chairman & CEO Ed Brennan said: “This announcement comes at a great time for DFS as we consolidate and strengthen our presence in key airport and downtown locations around the world.
“It is also especially rewarding as San Francisco has been a home for DFS since we began operations there in 1972, and because competition for this bid was particularly fierce due to San Francisco’s position as a leading destination for international travellers and an important gateway to the US.
“We wish to thank the San Francisco International Airport Authority for managing a clear and transparent bid process. Pending final board approval, we look forward to continuing to work with them to provide international visitors and Bay Area residents alike with the exceptional, award-winning customer service for which we are known, while seeking new and innovative ways to constantly elevate their shopping experience at San Francisco International Airport.”
The proposed minimum annual guarantee is US$42 million and the minimum acceptable percentage rent offer is 30% of gross revenues.
Sales reached around US$107 million last year. An award is scheduled for November. Scoring was based on a 110 points system (see table below).
Business 1ntelligence Service offers key insights into SFO passenger traffic
The tables below on San Francisco International Airport are courtesy of a new and exclusive relationship between The Moodie Davitt Report and leading travel retail research and analysis house m1nd-set. The Swiss company recently launched its Business 1ntelligence Service (B1S), a unique air traffic forecasting tool, developed with IATA and ARC’s ‘Direct Data Service’ (DDS) database.
The DDS program is built on travel agency sales data captured through ARC and IATA’s financial settlement systems and ticket sales contributed by airlines participating in the programme. DDS is able to estimate 100% of global airline sales data, including scheduled and charter flights and low cost airline traffic, and will even distinguish between travel classes. For more information e-mail m1nd-set Founder & CEO Peter Mohn at pmohn@ms-research.net
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