Shaken, not stirred

Looking ahead, Cappell noted how new technologies such as mobile payment, delivery to gate and kitchen innovations had changed the way F&B was presented at airports. “But optimal spend per passenger will never be achieved if today’s status quo remains,” he said in a reference to the industry’s model.

“It is business-critical that the commercial offer is one of the core pillars in any infrastructure development or refurbishment of existing facilities. Imagine what the potential would be if the number one focus was on the design, the allocation of space and the width and breadth of the commercial offer being aligned to the passenger demographics.”

He outlined three areas that need further focus: concession fees, pricing policies and tenure of contract. “In relation to financial returns from non-aeronautical concession agreements, US airports lag behind the rest of the world. Based on the data from the 2018 ACI concession benchmarking study, the rent percentage of gross sales overall was 11.1% from food & beverage and 15.1% from retail, including duty free. The larger hubs generate the highest returns at 13.8% for F&B and 16.2% for retail.

“Anyone working within the global airport commercial business will know just how low these concession fee returns are when compared to the rest of the world.”

On pricing policies, Cappell said many operators appeared to be charging more than the standard +10% on street pricing. “There is a balance between providing value for money and ripping customers off; people will pay a premium providing the offer and service is reflective and warrants the premium. One large glass of wine that costs significantly more than a bottle in the domestic market and a pizza which is circa 20% smaller than the same pizza in the chain’s downtown outlet, yet 25% more expensive at the airport, does not provide value for money or a great experience.”

Finally, on contracts, he stated: “I see a trend whereby operators are pushing for ten-year terms across the board and always try to negotiate contract extensions if opening a new outlet. A range between 5-7 and 10 years pending type of offer is much more the norm globally: 10 years for a coffee shop for example is extremely rare outside of North America.”

Sharp said there was much room for further digital innovation in the channel, given that consumers are “digitally literate and the travel ecosystem is very digitally-orientated”. He added: “We should be leading edge as opposed to following edge.”

Concluding, Sharp remarked: “We as an industry should challenge ourselves to build a more aligned set of incentives. Do so, and the growth potential is significant.”

“One million passengers per hour will walk past our outlets throughout the world but half will walk past and not go in,” said Emirates Leisure Retail’s Andrew Day. “This is a huge missed opportunity and this is only going to grow.”

He noted the great possibilities of capturing and applying data to improve the customer experience. “There is a lot out there but we need to put it all together, and we need to collect and share insights.

“It is about understanding the customer and what they want, and giving them consistency, creating a stress-free travel experience. A stressed traveller doesn’t spend but a relaxed one does.”