Originally Posted by
goodeats21
So, am I reading this correctly? Bottom line:
OTG spends $$ to remodel terminal C in exchange for monopoly on restaurants and retail inside the terminal?
How has this worked out for the other airports where this has been implemented? Some of the early posts here seem to think their presence is obnoxious...
I am not overly excited about being a captive audience for an overbearing vendor.
This is how it works at just about every airport (or terminal depending on the setup / ownership of the airport) in the US. Every so often, the airport authority / gov't entity / airline that controls the terminal will issue an RFP to the handful of companies out there that handle airport retail. Generally the contracts are divided up between Food & Beverage, News & Gift / Specialty Retail, and Duty Free. Generally, one party wins the contract for each each airport / terminal and that contract lasts for some specified period of time (say 5-10+ years), with the winning party agreeing to spend Capex dollars and provide a % of the revenues to the airport / gov't as a rent payment (there are many other nuances to the process). There are a handful of companies that tend to dominate each vertical - HMS Host, for instance, has an exclusive with Starbucks and so tends to dominate in F&B. Hudson Group is the largest News & Gift / Specialty Retailer, and is now part of Dufry, which operates Duty Free stores around the world (only a handful in the US). You don't often find master concession agreements, like the one here. Instead, one party wins F&B, another wins retail, and a third wins Duty Free. Also rare for the incumbent to get unseated - here HMSHost lost out.
In the case of OTG, interesting to note that they were awarded a master concession agreement, but will sublease the Retail and Duty Free (currently operated by Hudson and Dufry, respectively). You can kiss Starbucks goodbye on the F&B side (which IMO is a good thing, but others may disagree). Probably a net positive for F&B options overall, as HMS tends to leverage their market position to deliver a pretty mediocre product. OTG has done an admirable job of chipping away at the industry behemoth with far more limited resources.