How to do Business with McCarran International Airport Welcome to Session 1 Introduction to the Concessions Program and Upcoming Concession

Transcription

1 How to do Business with McCarran International Airport Welcome to Session 1 Introduction to the Concessions Program and Upcoming Concession Opportunities

2 Introduction to McCarran s Concession Program Presented by Scott Van Horn, Airport Concession Manager Clark County Department of Aviation October, 2013

3 Purpose of Today s Workshop To provide useful information to prospective concessionaires To provide information regarding requirements for operating in an airport environment To explain McCarran s Request for Proposal (RFP) process and how proposals are evaluated To assist potential concessionaires in deciding whether or not to pursue opportunities in the airport

4 About McCarran International Airport Owned and operated by Clark County, Nevada Administered by the Department of Aviation under the authority of the County Manager and with the policy direction of the Board of County Commissioners (BOCC) Clark County Airport System Includes: McCarran International Airport Henderson Executive Airport North Las Vegas Airport Overton/Perkins Field Jean Sport Aviation Center

5 More About McCarran International Airport Air Service 928 average daily flights at McCarran (number fluctuates seasonally) Serving on average destinations (number fluctuates seasonally) Passenger Volume 114, 000 passengers pass through daily 41.7 million - total passengers for 2012 International passenger volume increased more than 10 percent in Rankings by Airports Council International 7 th Busiest Airport in North America 20 th Busiest in the World

6 Passenger Profile Before coming to the Airport, only 14% of passengers have the intention of buying from specialty retail shop. Of those 14% only 61% actually made a specialty retail purchase. How that relates to McCarran Calendar Year million passengers leaving the airport 2.9 million had intentions of shopping 1.7 million actually purchased something Source DKMA Airport Research

7 Costs of Doing Business at the Airport Employee Costs Wages Background checks and badges Parking Delivery Costs Inspection of goods Vehicle escorts for airside deliveries Construction Costs Background checks and badges for contractors $300 per square foot - average build-out cost

8 Components of McCarran s Concession Program Gaming Advertising Transportation Rental Car Providers Passenger Services Specialty Retail News & Gift Food & Beverage

9 McCarran s Airport Concession Plan The original plan was approved by the Board of County Commissioners on February 21, 2006, then updated on December 4, 2007 and June 1, Recently updated plan presented before the BOCC on December 4, Provides national brand and local small business designation to all remaining specialty retail space not designated in the previously approved plans Provides recommendations for all specialty retail agreements that expire prior to December 31, 2016.

10 Goals of McCarran s Concession Program Maximize non-aviation revenue to keep costs as low as possible for airlines that serve Las Vegas Provide customer satisfaction Provide local opportunity

11 What is Specialty Retail For the purpose of the upcoming RFP, Specialty Retail shall be defined as a for-profit company which sells specific themed merchandise, or line of goods. Example of Specialty Retail concepts Souvenir Shops Candy Stores (Prepared snacks, candies, and popcorn) Clothing Stores Electronic Stores

12 Concession Contact Information All non-food concessions are handled through the Department of Aviation Business Office. Interested companies should register on the McCarran web site and contact Scott Van Horn Airport Concession Manager Clark County Department of Aviation (702)

13 What is Food and Beverage and Passenger Services Food and Beverage concepts shall include, but are not limited to the following (Food and Beverage is managed by Host International): Restaurants and/or bars Quick Serve Restaurants Juice Stands Coffee Stands Passenger Service concepts shall include, but are not limited to the following (Passenger services are selected through a RFP process): Shoe Shine Services Chair Massages Vending Machines

14 Concession Contact Information All Food and Beverage outlets at McCarran are administered through Host International. Interested companies should register on the McCarran web site and contact Ms. Betty Bauerle General Manager, Host International (702)

15 McCarran s Request for Proposal (RFP) Process

16 McCarran s RFP Process Timeline BOCC approval to release RFP Release RFP & advertise Pre-proposal meeting & site visit Respond to questions & issue addendum Evaluate proposals received Recommendation presented to BOCC Negotiate agreement BOCC approval to advertise intent to enter agreement BOCC approval for DOA to sign agreement Agreement fully executed Timeline begins for tenant improvements

17 Key Airport Terms and Definitions DOA Clark County Department of Aviation, the local government entity responsible for the operation of McCarran International Airport LAS airline industry code for McCarran International Airport Concessionaire a company that has entered into a contract with Clark County for leased space to operate a business at LAS ACDBE Airport Concession Disadvantaged Business Enterprise, as defined in 49CFR Part 23 DBE Disadvantaged Business Enterprise, as defined in 49CFR Part 26 Request For Proposals (RFP) - the open competitive solicitation process used by Clark County to select concessionaires. Also, the written document that governs this process.

18 More Key Terms and Definitions Enplanement an enplaning (or departing) passenger. Deplanement a deplaning (or arriving) passenger Gross Revenue - Gross Revenue will be defined as the total dollar amount derived or received by company as the total price of merchandise and service as a result of its operation at the Airport, whether for cash or credit and whether collected or uncollectible. Company will have the right to make credit sales, but will solely bear the attendant risk. Gross revenue will exclude retail sales taxes, excise taxes, or related direct taxes upon the consumer and collected by company as such. Minimum Annual Guarantee (MAG) The minimum annual rent payable to Clark County. Concessionaires pay the greater of the MAG or a percentage of rent based on sales. Sales per Enplanement Annual sales divided by the number of enplaned passengers.

19 Understanding Airport Statics Review Passenger / Airline Counts - each airline and each terminal serves a different demographic Request Gross Revenue Statements from the airport about activity in the area(s) where there are openings Visit airport website for passenger information

20 McCarran Sales Per Enplanement $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $- FY Ending June 30th Sales per Enplanement FY 09 FY 10 FY11 FY 12 FY 13 Gaming $1.74 $1.52 $1.51 $1.45 $1.46 Duty Free $17.22 $16.66 $16.94 $16.30 $23.51 Food and Beverage $6.13 $6.67 $6.44 $6.43 $7.61 News and Gifts $2.32 $2.36 $2.44 $2.46 $2.98 Specialty Retail $2.28 $2.41 $2.51 $2.51 $3.07 Shuttle/Limo $2.08 $2.15 $2.11 $1.99 $1.81 Valet/Carwash $0.22 $0.17 $0.18 $0.13 $0.14 Total (Exclude Duty Free) $16.06 $16.08 $16.37 $16.19 $18.34

21 McCarran Revenue per Enplanement FY Ending June 30th Airport Revenue per Enplanement $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- FY 09 FY 10 FY11 FY12 FY 13 Gaming $1.50 $1.31 $1.31 $1.25 $1.27 Duty Free $4.02 $3.94 $4.02 $3.91 $6.48 Food and Beverage $0.71 $0.76 $0.70 $0.77 $0.91 News and Gifts $0.43 $0.47 $0.49 $0.50 $0.61 Specialty Retail $0.45 $0.44 $0.44 $0.44 $0.54 Shuttle/Limo $0.27 $0.29 $0.28 $0.26 $0.36 Valet/Carwash $0.15 $0.14 $0.15 $0.13 $0.14 Total (Exclude Duty Free) $4.54 $4.38 $4.31 $4.31 $4.84 Total (Exclude Duty Free & Gaming) $3.03 $3.07 $3.00 $3.05 $3.58

22 McCarran Concession Sales Breakdown FY 12 Concession Gross Sales Breakdown Gaming 1% Duty Free 2% 5% 11% 15% 14% 8% 6% 37% Food and Beverage News and Gifts Specialty Retail Billboard Advertising Shuttle/Limo Valet/Carwash

23 What is a Request For Proposals (RFP)? An RFP is a solicitation for open, competitive proposals to meet the stated goals and objectives Subject to NRS Requires BOCC approval Responses are considered a Nevada Public Record A response creates no contractual rights and is not considered a bid

24 Proposer s Responsibility and Understanding All prospective tenants may only rely on the written RFP documents, when issued. The written RFPs will take precedence over any information conveyed verbally. Each prospective tenant must conduct its own independent evaluation of the business opportunities and risks of operating at the airport. Past performance may not be an indicator of future results. No warranty is expressed or implied with respect to future levels of sales, passenger enplanements, or financial results. The proposer must carefully examine the terms of the RFP and any attachments, required forms, and/or addenda; then evaluate all circumstances and conditions affecting its proposal at its own expense. Clark County is not liable for any costs associated with the development, preparation, transmittal, or presentation of any proposal or related material submitted.

25 Registering Your Company aspx

26 Preparation Know LAS Passenger profiles in each terminal, concourse, area Historical performances in those locations Hours of operation Meeting peak-period demand Employee badging Security Deliveries Storage and support spaces Small spaces Know your competition

27 Preparation Understand requirements and costs of operating at the airport Start planning and create a strategy for Financing Partnerships and alliances Pro forma analysis Register on McCarran s website for opportunities Review the airport concession plan Get to know the airport Industry Airlines, market forces, customer confidence

28 Preparation Know your business Marketing Business Plan Qualifications Strengths of team and Individuals Document your business processes Customer care Human resources Merchandizing Established strategy

29 Writing a Great Proposal Read the RFP Ask questions Answer the questions in the RFP Meet conditions set in the RFP Know your business Establish a strategy Proofread your proposal before submitting Check that cross references are consistent Follow ALL instructions

30 Parts of a Request for Proposal Section 1 Invitation for Proposal A Public Notice - Advertised in newspapers - ed to registered companies - ed to local chambers, local agencies, AMAC Section 2 Schedule A listing of important dates in the RFP process

31 Parts of a Request for Proposal cont. Section 3 - Scope Concept Locations Rent & Term Passenger Statistics Minimum Requirements/Qualifications Proposer s Tenant Improvement Responsibilities - Building - Security - Professional design - Airport construction expertise Deadline for clarification RFP Contact

32 Parts of a Request for Proposal cont. Section 6 - Instructions Answers should be clear and concise, grammatically and mathematically correct, and include a consistent description of Your concept, service/products, pricing, etc. Your financial capacity and capability to execute the proposed concept How you plan to meet the goals set forth in the RFP Your strategy and processes for addressing the many challenges of the airport environment Proposal format for submittal

33 Parts of a Request for Proposal cont. Section 7 - Forms Disclosure of Ownership 7A Non-Collusion Affidavit 7B - Must be notarized (page 6) Information Requested 7C - Reference question number, include any attachments Financial Proposal 7D - Must be signed by authorized rep.

34 Addenda & Questions/Answers Addendum must be signed and included in Proposal Ensure revised forms are used, if applicable Be sure to respond to all written questions and any additional questions asked at the pre-proposal meeting

35 Specialty Airport Retail A Story About Airport Retailing presented by Gary L. Lindstrom

36 A Story about Airport Retailing THE GOOD THE BAD AND THE UGLY I know if we can get a location at the airport, we will make a lot of money.

37 The Good, the Bad, and the Ugly There are several components that go into creating a successful airport retail concept: - Location, location, location What is the passenger traffic passing by the location? What is the history of the neighboring stores and the preceding store? What are the neighboring businesses? - Concept / Brand National Brand vs. Local Concept Broad vs. Narrow Appeal

38 The Good, the Bad, and the Ugly - Know the competition Commitment to hard work and hands on involvement ( We didn t know it would be this much work ) - Prepare a realistic proforma Are sales projections in line with stores in the area (RPE)

39 The Good, the Bad, and the Ugly The Good - Make Lots of Money The Bad - Break Even The Ugly - Lose Money

40 The Good, the Bad, and the Ugly To start your process: - Look at everything through your customer s eyes - Identify your concept or brand Does your concept exist elsewhere in the airport? Is the store size adequate to properly support your concept? - You will be competing for every passengers time and money. Remember, most specialty retail sales are impulse.

41 The Good, the Bad, and the Ugly Design Your Store Select an architect who has successfully designed airport specialty retail stores The most important component of a well designed store is the LIGHTING.

42 The Good, the Bad, and the Ugly Design Your Store cont. The most effective signage is a well lit store where the merchandise POPS OUT A blade sign is more effective than a sign over the entrance. Don t allow your architect to design a Sea of Racks. That is boring and uninteresting. Remember, you are trying to get the passenger into YOUR store. Don t overspend. This will kill the proforma.

43 The Good, the Bad, and the Ugly Merchandise Your Store Don t try to be all things to all people. Focus on the brand/merchandise you have selected. - Create focal point displays that attract the passengers attention.

44 The Good, the Bad, and the Ugly When a passenger is walking by your store, you have about five seconds to make an impression on them. If they won t come into your store, they won t buy from you. A lost sale. Don t overuse TV monitors to sell your product. Create an inviting flow into your store. Keep in mind, the passengers are dragging luggage with them. If it is too crowded they will walk on by. Change your merchandise and focal point displays at least quarterly, or by season or convention.

45 The Good, the Bad, and the Ugly Customer Service The most difficult aspect of operating a store in an airport is creating a successful customer service program. The center piece of a successful program is the staff you hire. Do they know what you expect of them? Are they personable? Can they engage the passenger in conversation? Do they know the product and can talk about its benefits? Can they create an add on sale?

46 The Good, the Bad, and the Ugly How do you create a motivated salesperson? Be sure they understand your expectations at the time of hiring them. Do they understand that selling is just not ringing the register. Invest is Sales training Also consider commissions or a bonus arrangement

47 The Good, the Bad, and the Ugly Q & A