LAX hopes a retail redo is the hot ticket for fliers
When Clifton Moore ran the Los Angeles airport system from 1968 to 1993, there wasn’t much emphasis on dining and shopping for people waiting for their planes at LAX. About all they could get were the basics: a newspaper, a cup of coffee, cafeteria fare and a preflight libation.
The mantra was “We are an airport, not a shopping mall,” and people on the staff were proud that Los Angeles International Airport had the least concession space of any major airport in the United States.
Not anymore. Although the room devoted to beverage, food and retail services at the nation’s third-busiest airport remains comparatively small, LAX officials say they now want to offer the traveling public more than they ever have from concessions.
Los Angeles World Airports has launched an ambitious effort -- the first since 1995 -- to renovate the bars, fast-food outlets, restaurants, newsstands and shops inside eight terminals, which handled about 50.7 million passengers last year.
This month, the Board of Airport Commissioners requested bids for services at 42 sites in Terminals 4, 5, 7 and 8 as well as a commuter airline facility. Proposals are due in September.
Another round of bidding for Terminals 1, 3 and 6 is expected by year’s end. Concessions at the Tom Bradley International Terminal will be addressed later during a planned expansion and modernization.
“We want more variety, more dining and beverage opportunities, and better-quality food and service,” said Gina Marie Lindsey, executive director of the airport agency. “We need more cutting-edge, more contemporary and more L.A.-centric approaches.”
The airport now has well-known brands such as Wolfgang Puck, Karl Strauss and California Pizza Kitchen, but those concessions, officials say, are almost 15 years old and need updating.
Airport officials also want to reduce their reliance on a handful of master concessionaires, such as HMS Host Corp., Delaware North Cos. and Hudson Group, which have been hired on long-term contracts to manage nearly all the beverage, food, retail services and bookstores at the airport.
Their idea is to break the umbrella contracts into individual packages for beverages, fast-food, casual dining, newsstands and shopping. Although large concessionaires can compete for those packages, officials say, the change in philosophy should create opportunities for smaller local businesses to bid on contracts, which could result in better quality, more variety and lower prices for travelers.
“The plan is to get people out of their seats at the gates and into the restaurants and retail stores,” said Amy Shaw, who is directing the renovation of concessions.
Food and retail services at LAX have repeatedly received average and below-average marks from passengers interviewed for audits and consumer surveys, such as those conducted by J.D. Power & Associates. The preliminary results of a current in-house survey of travelers are equally downbeat.
“It’s average at best,” said Michael Young, 35, of Los Angeles, who travels regularly out of LAX. “Even when they try to do nice, like at Wolfgang Puck, it is still average. Change would be good. The concessions lack freshness all the way around.”
Although they like such mainstays as Starbucks and McDonald’s, passengers also complain that prices are too high, there are not enough choices for food and beverages, and the concessions don’t reflect Los Angeles.
“There’s some good stuff in the airport. But with the ocean and Venice nearby, you’d think there would be something ‘beachy,’ like a skate shop or surf-related company,” said Elan Crews, 38, of Oakland, who flew to Los Angeles this month to visit friends.
Airport officials say another reason concessions have not lived up to their potential is the lack of space compared with 16 other major airports in the U.S. As such, retail shops and restaurants at LAX can become crowded quickly or develop long lines at sales counters, which can deter shoppers.
The conditions led auditors for K.H. Consulting Group to conclude last year that the planned renovation would give airport officials a chance “to replace a dated and uninteresting drag on LAX’s image and transform the airport into a modern, first-class facility.”
LAX concessions “are not where they need to be,” said Craig Banikowski, president of the Los Angeles Business Travel Assn. “You must invest capital to make improvements and address changing tastes and styles. Business travelers are not what they were 20 years ago.”
If successful, the overhaul could boost revenue for LAX, which has been stung by one of the worst downturns in the history of the airline industry. Although hit hard by the economy, concessions remain big business at major airports at home and abroad, generating 40% to 50% of their revenue. Last year, LAX made about $280 million from concessions, more than half from parking and rental cars.
There is considerable room to improve, however. As of last July, eight other major U.S. airports, including those in San Francisco, Seattle-Tacoma and Miami, had higher sales per passenger. The average passenger at San Francisco International spent the most -- almost $11 -- while the typical traveler at LAX spent almost $8.
The go-local approach to concessions has been relatively successful at Denver International Airport, where businesses bid on each of more than 100 concession sites. The result provided travelers with a variety of concessions, including popular national franchises such as Starbucks and McDonald’s and recognizable local brands such as Boulder Beer and the Denver ChopHouse & Brewery.
Patrick Heck, a deputy manager in charge of revenue development at the Denver airport, said concession earnings had grown faster than inflation and the increase in passengers. The airport took in about $250 million in concession revenue last year.
“It’s been fairly well received. People seem satisfied with it,” Heck said. “Our concession programs have done OK in terms of revenue, though we are not blowing it away.”
Denver, however, received below-average ratings for food and retail services in last year’s J.D. Power consumer survey, representing a slow decline over several years. Dallas-Fort Worth International Airport, which also used the go-local approach, has received marks similar to those of LAX.
Heck said that many of Denver’s concessions, like LAX’s, are almost 15 years old and “a little dated,” but he does not fault the philosophy of attracting popular local brands. “I would take this approach again,” Heck said.