Business Information Session Terminal 4 Retail Phoenix Sky Harbor - PowerPoint PPT Presentation

Business Information Session Terminal 4 Retail Phoenix Sky Harbor International Airport July 22, 2014

Administrative Points • Everything presented in today’s meeting is subject to change • Please turn off all phones and electronic devices • Today’s PowerPoint presentation available at: • https://www.phoenix.gov/solicitations/35 2

Introduction of Phoenix Team • Tamie Fisher, Assistant Aviation Director • Roxann Favors, Deputy Aviation Director • Paula Kucharz, Terminal Concessions Manager • Valerie Churchwell, Outreach Project Manager • Angela Booker, Equal Opportunity Department 3

Purpose of Meeting • Setting the stage • Small business component • Program goals • Future meetings • Existing retail program • Preliminary RFP • Market Research schedule • Contracting opportunities • RFP process/terms 4

Communication Links • www.skyharbor.com/about/airportstats.html • www.phoenix.diversitycompliance.com • www.skyharbor.com/about/securitybadging.html • https://www.phoenix.gov/solicitations/35 5

Setting the Stage • Why Sky Harbor? – Sky Harbor is the gateway to our City, State and the entire Southwest – Tremendous sales environment – National and international visibility 6

Setting the Stage • Terminal 4 (T4) is home to: – US Airways/American – Southwest Airlines – British Airways – Aero Mexico – Air Canada – West Jet – Volaris 7

Setting the Stage • T4 Passenger Activity – 33.1 million total passengers – 16.5 million total enplaned passengers • Enplaned Passengers – Travelers boarding a flight – These travelers spend! • Airside vs. Landside – Airside is post-security (on the concourses) – Landside is pre-security (in the Lobby) 8

Setting The Stage-Definitions • Enplanements – Another way to express those passengers boarding a flight • MAG – Minimum Annual Guarantee paid in monthly installments • Percent Rent – Landlord shares in the success of the shops; often called overage rent 9

For Example ONLY • Calculations for this example – 1000 sq. ft. location – MAG is $100 per sq. ft. – 10% percentage rent – 1000 x $100 = $100,000 MAG rent per year; $8,333 paid monthly (plus taxes) – Annual “natural breakpoint” = $1,000,000; monthly “natural breakpoint” = $83,000 – If $2,000,000 gross sales; total rent $200,000 ($100,000 in MAG rent; $100,000 in percent rent- plus taxes ) 10

Setting The Stage • How is operating at the airport different from shopping mall or other retailing? – Logistics – Operating hours – “Hurry” factor – Employment – Security – Delays 11

Setting The Stage • All concessions space is offered through a competitive Request for Proposals (RFP) process • The City does not direct negotiate for concessions space • RFP will provide all specific details, including locations that will be offered 12

What Does It Take? • The ability to… – Provide an experienced team – Develop-plan-design-construct a retail concept – Operate a high quality unit generating high sales volume • Financial resources – Construction costs-$350/sf – A 1,000 sf store would cost no less than $350,000 in construction costs – No tenant improvement allowance-improvements vest to the City 13

Goals of the Retail Program • National, regional and local brands and concepts and current trends • Optimize sales and revenues • Increase opportunity for local and small business participation • Increase number of national brand name stores • Raise quality and uniqueness of souvenir merchandise • Phased implementation to maintain customer service 14

Existing Program • Approximately 35, 331 square feet – 14,308 sf or 40% pre-security – 21, 023 sf or 60% post security • Gross Sales – CY 2012: $47.2 million, $1,335/sf, $2.86/ep – CY 2013: $46.8 million, $1,323/sf, $2.84/ep • Eight operators • 20 contracts • 38 existing units • Units are 7-10 years old 15

Market Research • Online surveys – Summer, Fall and Spring – 50,000 surveys completed • Intercept surveys: October– November 2013 – 4,000 surveys completed • Focus Groups: 2 sessions on April 23, 2014 – Navigators, airlines, travel professionals and the traveling public Key survey results will be provided in the RFP 16

Market Research Passenger Demographics • Gender: 53% male and 47% female • Age: 61% are between the ages of 35-64 • Education: 63% college and higher education, and 21% some college • Income: 50% have incomes over $75,000, and 20% have incomes between $50,000-$74,000 • Occupation: 28% professional/technical and 15% managerial • Sector of Work: 63% private sector 17

Market Research Traveling Characteristics • 42% connecting, 33% are visitors flying from PHX, and 25% are residents flying from PHX • 29% fly 3-6 times per year, 24% fly once or twice/year • 19% are first time travelers, 15% fly weekly/monthly • 59% travel for pleasure, 27% travel for business, and 14% travel for pleasure/business • 7% travel with children • 86% of passengers are at PHX for over an hour, and 26% are at PHX for more then two hours 18

Market Research Retail Preference • Snacks, Bottled Water, Juices, Sodas 82% • Reading Materials 53% • Drug Store Merchandise 33% • Travel Accessories 24% • Souvenirs 21% • Chocolate/Candy 17% • Electronics 9% • All other categories less than 9% 19

Market Research Personal Services • Power Outlets 53% • Bank ATMs 36% • Airport Lounge 19% • Travelers Retreat 19% • Massage & Spa Service 13% • Nail Salon 10% 20

We’re Looking for… Retailer Characteristics • Experience with retailing and with concept • Provides quality merchandise and high customer service • Understands the needs and preferences of T4 customers • Creative in developing a special/unique shopping experience 21

Minimum Qualifications • Within the past five (5) years, Proposers are required to have three (3) years continuous working ownership, or executive management experience in a retail business operation. An individual who holds or has held a position of administrative or managerial responsibility for the operation of a retail business would meet the minimum qualifications. • If the Proposer is a new business, the previous executive management and retail business experience of the identified owner(s) of the new business will be considered if it meets the experience requirement above. 22

Contracting Opportunities • Issue date – early December 2014 • One RFP – potential of three contracting phases • 43,307 square feet – Phases 1 & 2 = 37,667 sf – Phase 3 = 5,640 sf* * Contingent on space availability 23

Key Terms of the RFP • Contract Term: 7 years with one 3-year option • Rent: MAG or Percentage Rent, whichever is greater – Percentage Rent ranges from 10% to 16% – MAG set by unit/package – Reasonableness of proposer’s sales projections will be considered • Minimum Capital Investment : $350 sf – Compliance with Tenant Design Criteria – Renderings and material board will be required in submittal • No Food Allowed 24

Key Terms of RFP • Street Pricing Required • Employee Retention Plan: Successful proposers must hire and retain existing staff for a minimum of 90 days • No exclusivity -no contingencies • Selection will be based on entire proposal, not just retailers that show the highest rent • Proposer can win only one News & Gifts package in each phase 25

Key Terms of the RFP • Number of Submittals: proposer and proposer’s partners can submit only one proposal and be on only one team on each contract opportunity. • A subcontractor may be on multiple proposals • Forms: Various forms will be provided in RFP will be required to be completed by proposers • Storage Space: Limited space on-site for lease 26

RFP Details • 18 contract packages (bundles) and potentially 3 phases • Different size bundles for different size operators • Packages range in size from 951 sf for a single unit/package to 4,582 sf for four units/package. • Pre and post-security units are mixed together. • News & Gifts and specialty retail are mixed together • News & Gifts units are included in 7 packages in Phases 1 & 2 • 11 non-News & Gifts packages. There are no limits on the number of packages that a Proposer can win. *Includes Phase 3 concepts; contingent on space availability 27

Proposed Concepts and Number of Units 43,307 sf • 9 News & Gifts • 2 Contemporary Art, Art Glass, Local Crafts, etc. • 6 High Tech/Electronics • 2 Fashion Jewelry • 4 Travel Accessories, (national/int’l brand stores) Handbags, Leather (national/int’l brand stores) • 2 Duty Free/Duty Paid • 4 Open Concepts • 2 Nail Bar/Massage/Spa • 3 Chocolate/Candy • 1 Non-Prescription Drugs, (national/int’l or local brand Sundries, Snacks, News & stores) Mini Medical Clinic • 3 Native American • 1 Cosmetics/Perfumes or Sunglasses/Watches • 3 Men’s and/or Women’s (national/int’l brand stores) Clothing & Accessories * Includes Phase 3 concepts; contingent on • 2 Souvenirs space availability 28