USA. The San Francisco International Airport (SFO) Commission is set to ratify proposed revisions to the terms of the duty free and luxury goods tender at a meeting today.
As reported, SFO issued its long-awaited Request for Proposals (RFP) for the concession on 21 March. Bids close on 15 September. The opportunity has attracted strong interest. Besides long-term incumbent DFS Group, a briefing on 4 April featured representatives from ATU Americas, DFASS, Dufry, Duty Free Americas, Gebr Heinemann, Hotel Shilla, Hudson Group (Dufry), Lotte Duty Free and Setur, plus a number of specialist concession companies.
The contract’s 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.
SFO has revealed some proposed updates to the RFP documents, which require Commission approval.
Potential participants suggested that there be an adjustment mechanism for the Minimum Annual Guarantee (MAG) due to the planned retail plaza and a major renovation.
In response, airport management has proposed a pro-rata MAG reduction should the leased premises be reduced in size due to the retail plaza construction and a planned central security checkpoint.
The proposed minimum annual guarantee is US$42 million and the minimum acceptable percentage rent offer is 30% of gross revenues. Some potential bidders proposed a reduction in the MAG to US$29 million but airport management recommend retaining the US$42 million figure.
The RFP also calls for a minimum capital investment of US$1,000 per square foot, which some potential bidders said was “far above the actual cost for world class duty free stores”. Staff however asserted that the minimum investment figure should remain. The planned mid-term investment of US$750 per square foot will also stay in place.
The lease is for the management and operation of ten duty free and luxury store locations in the international terminal and one in T1.
Sales reached around US$107 million last year.
As we reported previously in April, bids are due on 15 September with an award scheduled for November. Scoring will be 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, unveiled today, 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
