LOS ANGELES — Travel retail is set for expansion at Los Angeles International Airport as part of an at least $1.2 billion overhaul.
This story first appeared in the November 12, 2009 issue of WWD. Subscribe Today.
Looking to the future despite a recession driven decline in tourism, officials last month approved a plan to double retail and restaurant space in the next four years to about 100,000 square feet at the Tom Bradley International Terminal.
“We are space constrained right now,” said Amy Shaw, director of concessions development at Los Angeles World Airports, the city department that owns and operates the airport. “The additional space we feel will substantially increase sales.”
Visitors to the airport, which has nine terminals with a total of almost 185,300 square feet of retail concessions, will encounter changes well before the Bradley project is scheduled be finished in 2013. Four other terminals with 22 retail units and 27 food units occupying 71,145 square feet will be updated by 2011. Four more terminals are also scheduled for improvements before completion of the Bradley facilities.
In about four years, Shaw said there would be “a whole new L.A. concession program with an L.A. sense of place.”
Sales from concessions at the Bradley terminal last year dipped about $3 million to $116 million, a sliver of the estimated $1.05 billion the airport rang up in 2008. Duty free accounts for about 65 percent of the Bradley terminal’s concession sales. Shaw said a key problem is that the largest duty free shop is in front of the security check-in, which will change with the expansion.
“There is lost sales because travelers don’t want to linger; they want to go through security,” Shaw said. “In all international airports, duty free shops were always post-security.”
The last time the Bradley terminal had significant upgrades was in 1996. The nine companies operating food and retail concessions, most notably the LVMH Moët Hennessy Louis Vuitton-owned duty free operator DFS Group, have been at the terminal since around then. Their contracts expire at the end of 2012, but the airport could begin evaluating contracts for new Bradley concessions next year.
The airport was the eighth busiest in the world for the first seven months of this year with 42.5 million passengers and was the sixth busiest last year with slightly fewer than 60 million passengers, according to the Airports Council International. Airport officials anticipate the trend of passenger decreases will reverse by 2014.
The Bradley terminal project will be paid for with a mix of the airport’s operating revenues, capital improvement program funds, airline fees, passenger facilities charges and airport revenue bond proceeds. The project is one element of an estimated $11 billion master plan to modernize the airport.