Revisiting the Ideal RFP

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, we got through only half our agenda! For our December Forum, ARRA hosted three industry veterans who – along with host Andy Weddig – collectively have worked on more than 500 RFPs over their careers. This panel knows RFPs! And, as we all know, RFPs set the framework for a successful airport-concessionaire business relationship.
 
Motivating this conversation are many changes in the airport concessions industry that followed the pandemic and continue in the recovery. As our industry slowly recovers from the business impacts of the Covid pandemic, much has changed. We face long-term labor shortages, increasing product costs, and soaring capital costs, to name just a few of many disruptions. Some of these challenges emerged from the pandemic. Others pre-date Covid and were magnified by the pandemic. Either way, it’s clear that many challenges reflect structural changes and are likely permanent.
 
We are also, as an industry, seeing a large number of RFPs, and expect many more coming out next year. However, despite the structural challenges in industry, the form and terms of these RFPs is largely unchanged. Which prompted our question for this Forum: do RFPs reflect financial and operational realities of our new business environment?
 
This is not an easy question. But it is a crucial discussion our industry must have. 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; the role of procurement rules; and more. Yet there’s so much left to discuss. ARRA plans to bring our panel together in the new year to continue the conversation.
 
Here are three key takeaways:
 

• It’s disheartening. Too many current RFPs appear to have been written pre-pandemic and were just “dusted off” and released. In some cases, there seems to be no consideration of the “trials and tribulations” industry stakeholders endured through the pandemic.

 

• It is easier to make changes at the beginning of a contract than in the middle. Hence, current RFPs present the perfect opportunity to make adjustments. The RFP is a chance to pull levers that can reduce risk for everybody. As Mookie puts it, “when there’s an opportunity to set up the pins correctly, you can bowl a strike every time.”

 

• Rather than a single ideal RFP, there may be many variations of the ideal RFP. Airports are in many different places: some small, some large; older concessions programs, new programs; maturity of financing plans; connecting hubs versus O&D; governance; airline agreements; and more. The many combinations of these (and other) factors frame the ideal RFP – from an airport’s point of view.

 
These are just three important takeaways. Our panel offered many more profound insights. We encourage you to watch the replay. And watch your email for information about Part 2 next month.

Read More