Revisiting the Ideal RFP, Part 2

With Guests
John Cugasi, Paradies Lagardère
Stu Holcombe, Travel Retail Partners
Mookie Patel, Austin-Bergstrom International Airport
 
​The RFP topic is so big, so important, it took two Forums to do the topic justice! For our December Forum, “Revisiting the Ideal RFP,” we posed a difficult question: do current RFPs reflect the financial and operational realities of the post-Covid business environment? Our guests’ answer: not so much! Mookie, Stu, and John covered many facets of the Ideal RFP: balancing the needs of airports and concessionaires, industry lifecycles, moving the needle on MAG, and the role of procurement rules. We encourage you to read the recap or watch the replay here.
 
But there was still much left to discuss. And it remains a crucial discussion our industry must have. Especially now with a backlog of RFPs from the pandemic and an unprecedented amount of business out on the street.
 
For our February Forum, ARRA brought our December panel back together to continue the conversation. Mookie, Stu, and John did not disappoint! Their insights and bold ideas for concessions programs and the RFP process are well-placed from nearly 100 years of collective experience. We discussed alignment of goals among concessionaires, airports, and governing bodies; proper program size; evaluation committees and criteria; the impact of the changing passenger base and travel purpose; pop-ups to keep a program fresh and engaging; and the critical, central importance of customer service. It was an inspired conversation.
 
Here are three key takeaways:
 

• This industry is a very capital-intensive business with substantial risk. And like any investment, concessionaires need to exceed a hurdle rate of return – that is, “pencil” – to attract capital and make the investment worthwhile. But penciling is not just about economic return. Companies must also consider exposure, engagement with the consumer, and brand development. Businesses do not want to pass on opportunities. But if an opportunity offers insufficient financial return or inadequate brand development, then it doesn’t “pencil” and the company will take a pass.

 

• Midterm refurbishment requirements just don’t make sense. The objective should be to keep stores and restaurants “opening day fresh,” which is more about ongoing maintenance than “a chunk of money at a random point in time.” Moreover, airports and concessionaires should work together to make changes as needed. If things aren’t working out, then change them out. As Stu said, “You’re better off to get rid of a concept that’s not performing and put something else in.”

 

• Outreach communication is critical; it must be early and often. Proper outreach presents an opportunity to be better, to solve for a lot of problems. One-on-one outreach early in the RFP process with small-, medium-, and large-size concessionaires allows dialogue: “here’s what we see, what do you see?” With this feedback, an airport can adjust and tweak its plans improving the odds of a robust RFP leading to a program that achieves its goals with great brands, great design, and a great sense of place.

 
These are just three important takeaways. Mookie, Stu, and John offered many more profound observations. We encourage you to watch the replay. 

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