USA. San Francisco’s Airport Commission on Wednesday approved the awarding to DFS Group of San Francisco International Airport’s duty free and luxury stores concession.

As revealed by The Moodie Davitt Report, DFS was last month judged by a six-member evaluation committee to have made “the highest ranking, responsive and responsible” proposal of the final short-list of three travel retailers. The award was subject to Commission approval.

As the table below shows, DFS was an emphatic winner with a 96.67 score out of a possible 110. It came in ahead of the Heinemann-led Travel Retail San Francisco bid’s 83.59 and Dufry North America’s 79.83%.

DFS, the incumbent, can now look forward to a base term of 14 years, with an automatic extension of up to five years in a new central retail plaza – should one be constructed.

Besides its duty free stores, DFS will operate Hermès, Gucci, Burberry, Yves Saint Laurent and Coach luxury boutiques.

Clear-cut victory: DFS Group’s score out of a maximum of 110 made it a comfortable winner ahead of the Heinemann-led runner-up

DFS will pay either the minimum annual guarantee (US$42 million) or a percentage rent, whichever is higher.

The retailer’s winning bid contained the following percentage rent formula:

  • 45.8% of gross revenues achieved up to and including US$100 million; plus
  • 41.8% of gross revenues achieved up to and including US$100 million and 1 cent up to and including US$160 million; plus
  • 30% of gross revenues achieved over US$160 million

As a guideline to the potential cost of the winning bid, sales reached around US$107 million last year.

As previously reported, 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. The others (see table above), were Travel Retail San Francisco and Dufry North America. A Duty Free Americas proposal was submitted but did not result in a final interview with the evaluation panel.

About the concession: DFS Group’s 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. As mentioned, an automatic extension period will be available, if necessary, to ensure that the majority of premises in a new central retail plaza (if constructed) are operational for a full five years.

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A retention that will feel every bit as good as a new contract gain: DFS, the long-time incumbent, faced serious competition this time around

Business 1ntelligence Service offers key insights into SFO passenger traffic

The tables below on San Francisco International Airport passenger traffic 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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