Ft. Lauderdale-Hollywood

International Airport

May, 2010

1

To seek Board direction regarding

the concession management and

leasing methodology best suited to

improving customer service and

growing revenue at Fort

Lauderdale-Hollywood International

Airport (FLL)

2

Presented current concession contract situation

Suggested the following revisions:◦ Food & Beverage:

CA-One: Non-exclusive agreement for Terminals 3 & 4

New competitive solicitation for Terminals 1 &2

◦ News & Gift:

Paradies: Non-exclusive agreement for Terminals 3 & 4

AMS: Non-exclusive agreement for Terminals 1 & 2

Need Policy direction to move forward

3

Consultant engaged in February 2010◦ Completing analysis of existing conditions & market insight

study◦ Concession redevelopment study Analyzing concession demand for space (store and support) Prepare sales and revenue projections Study covers all types of shop-based concessions (food service,

news/gift, specialty retail, duty-free retail)◦ On-call services may include, but are not limited to: Leasing guidelines/contract term recommendations Privilege fees, rental structure, and capital investment

requirements◦ General advisory services may include, but are not limited to: Planning and analysis in support of relocation of security

checkpoints or terminal redevelopment Analysis of costs, benefits and means for common concession

goods receiving, screening and delivery.

4

Food and Beverage:◦ CA-One – Terminals 1-4: Expires December 31,

2013

News & Gift:◦ Paradies Fort Lauderdale – Terminal 1, Concourse B:

Expires December 31, 2011

◦ AMS – Terminal 1, Concourse C & Terminal 2: Expires December 31, 2013

◦ Paradies Broward – Terminals 3 & 4: Expires December 31, 2013

Duty Free:◦ Broward Duty Free: Expires December 31, 2013

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November 2010

Construction Documents with

Commercial Locations in

Terminals 3 and 4 Completed

by BCAD

Mid 2011 -

Early 2012

Interim

Concessions

Required During

Construction

Phase

Mid 2013

Opening of new

permanent

Terminal 3 and

4 concessions

December 31,

2013

Current scheduled

expiration of food

service, retail and

duty free retail leases

Investment

Required

6

Existing food & beverage concession agreement is exclusive and prevents any new food & beverage operator from serving the terminal complex prior to December 31, 2013

CA-One, Paradies, and Broward Duty Free unlikely to open new locations in Terminals 3 or 4 without extension due to investment required

Airport is required to reimburse existing food and beverage concessionaire for unamortized investment -this option is very expensive for the Airport◦ Substantial investment in new facilities beyond the initial

investment was not contemplated in retail or duty-free retail contracts

7

Existing agreement does not allow for a new food service concessionaire to open locations before January 1, 2014 due to exclusivity language. With no extension, the County is left with two options:◦ Require existing concessionaire to build new locations, but the

County is compelled to buy out the investment; or

◦ Do not have any food service concessions in newly built-out areas (or areas that are substantially changed) until at least 1/1/14.

An outgoing concessionaire may be more interested in cutting costs than growing sales

An outgoing concessionaire is unlikely to invest in interim locations during construction

8

Extend CA-One for Terminals 3 & 4 only◦ Require a new concession plan (being developed with

SH&E)◦ Allows Airport to ensure investment made in Terminals 3

& 4◦ Include best practice terms & conditions, including

performance-based language and “green” design

Remove all CA-One Exclusivity◦ Competition encourages better performance◦ Allow News & Gift operators to sell bottled beverages

Issue a Competitive Solicitation for Terminals 1 & 2 in late 2010◦ Contract effective 1/1/2012

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Extend AMS, Paradies, and Broward Duty Free as of January 1, 2012◦ AMS in Terminals 1 & 2

◦ Paradies in Terminals 3 & 4

◦ Allows Airport to ensure investment made in all terminals and accommodates varying development schedules

◦ Include best practice terms & conditions, including performance-based language and “green” design

◦ Contracts are non-exclusive

Allows flexibility for new product lines not carried by existing vendors

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Request policy direction to address:◦ Food & Beverage:

CA-One: Non-exclusive agreement for Terminals 3 & 4

New competitive solicitation for Terminals 1 & 2 in late 2010

◦ News & Gift:

Paradies: Non-exclusive agreement for Terminals 3 & 4

AMS: Non-exclusive agreement for Terminals 1 & 2

◦ Duty Free

Broward Duty Free: Non-exclusive agreement in all Terminals with international departures

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