​Challenging the Concessions Status Quo. ARRA and The Moodie Davitt Report co-organized this “electric” and “compelling” session (in Dermot Davitt’s words) at the recent Airport Food & Beverage (FAB) + Hospitality Conference. Moderated by The Moodie Davitt Report’s President and Editorial Director Dermot Davitt and featuring ARRA board members David Bisset of Paradies Lagardère and Greg Plummer of Concord Collective, Deanna Zachrisson of San Diego International Airport, and ARRA Executive Director Andy Weddig, this panel tackled an important topic: our industry’s financial capability to continue to deliver the beautiful venues, great experiences, and exceptional service celebrated throughout the conference. ARRA members have made great strides to enhance the passenger travel journey over the years. But, partially due to Covid, partially due to political pressures, partially due to our own successes, we have arrived at a crossroads and together with our airport partners must make a choice about our future, as well as the future we present to our customers.

​To be clear, Airport Restaurant & Retail Association (ARRA) members support livable wages for their valued associates. In fact, ARRA members at many airports – including Los Angeles International – offer wages and benefits that exceed minimums set under various living wage ordinances. But we warn of unspoken and unintended consequences of well-intentioned efforts to legislatively impose wage rates. In a recent opinion column in the Los Angeles Daily News, ARRA board member Greg Plummer cautions that Los Angeles’ proposed $30 minimum wage is not a boon, but rather a threat to hospitality and airport workers and their employers.

​ARRA was well represented at the Airport Experience Conference in Denver earlier this year. ARRA member Peter Amaro (Master ConcessionAir) and Board member Greg Plummer (Concord Collective) participated on the ACDBE Evolution: Strategies from Program Leaders and Graduates panel. Peter and Greg shared the stories of developing their businesses to, in Peter’s case, successfully graduate from the ACDBE program to Greg’s success of being the first ACDBE to purchase an entire airport portfolio from a prime concessionaire.

​Although the labor shortage is now less dire than six to nine months ago, hiring and retaining employees remains challenging for concessionaires. A recent survey of ARRA members showed the magnitude of the hiring challenge: all respondents had fewer employees today than in 2019; 50% of respondents need 11% to 20% more employees; and another 28% of respondents need more than 20% more employees to consider themselves fully staffed. And, as is often the case, necessity inspires creativity!

​​Ten days ago, the U.S. Bureau of Labor Statistics’ Consumer Price Index report showed inflation remained “hot” and exceeded expectations in September. At 8.2% over the past 12 months, the current overall rate of inflation continues at its highest since 1982. High inflation affects everybody – consumers and businesses. But there’s more in the details. ARRA calls your attention to other labor and inflation facts that reveal significant financial disruptions in the airport concessions industry continue unabated.

​​In her recent article for Aviation Pros, Margaret Martin, President of Martin Airport Law LLC and former Chief Development Officer of Nashville International Airport, notes that the ultimate goal of an airport concessions program is to provide food, beverage, retail, and services for passengers. She also notes the challenging circumstances ARRA members and other concessionaires face including soaring construction costs, supply-chain woes, and labor shortages and accelerating cost. Margaret observes that airport contracting practices have not adjusted to current market conditions and, indeed, end up exacerbating the challenges. She calls it “a perfect storm.”

ARRA Encourages Operational Flexibility as Recovery Slows

Air travel news this summer has been dominated by headlines about cancellations, delays, pilot shortages, and frustrated passengers. It has been a summer of discontent! But lurking in the background is a more serious threat to our industry’s recovery: as reported in a recent article in the Washington Post, American consumers are pulling back on travel. Adobe Analytics reports that U.S. flight bookings were down 2.3% in May from a month earlier. A Barclays Bank analysis of credit card transactions shows spending on services like travel has slowed to half the pace seen at the beginning of the year. Charles Schwab notes “travel-related spending ls weakening.” The Post further reports flight searches on Kayak are down 13% in comparison to the same period in 2019.

The Airport Restaurant & Retail Association (ARRA) urges airports to relax concessions pricing policies in this period of high inflation in order to avoid a second financial crisis for airport restaurateurs and retailers. ARRA recommends airports:

• Waive contract restrictions on the frequency of price changes
• Waive contract approval requirements of price changes
• Adopt adaptive pricing that permits individual concessionaires to respond as necessary to cost pressures and market conditions