US AIRPORTS: SAN FRANCISCO INTERNATIONAL
DFS speaks San Francisco’s language as 14-year lease offers platform to build
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he San Francisco Airport Commission awarded the 14- year International Terminal
Duty Free and Luxury stores lease to DFS in December. This covers 11 duty free and luxury stores across 46,295sq ft, including 10 in the International Terminal and one in Terminal 1. As reported, DFS beat of competition
from nearest rivals Travel Retail San Francisco and Dufry North America to emerge ‘as the highest ranking, responsive and responsible proposer’ for the lease, with luxury brand concepts including Hermes, Gucci, Burberry, YSL and Coach. Aside scoring 96.67 points out of a possible 110, attention to detail was a key factor in the award of the leases, according to SFO. “The evaluation panel was
impressed with DFS Group’s knowledge surrounding their customer at SFO,” comments Cheryl Nashir, Director, Revenue Development & Management, San Francisco International Airport. “DFS’ competitors in this
competition also showed a keen knowledge of what brands would be most desired.”
Extension option DFS is entitled under the terms of the lease to trigger an automatic extension period of up to five years, providing it chooses to operate and manage new stores at the airport’s proposed centralised security checkpoint and retail plaza in the International Terminal. This contract extension period
DFS Group emerged victorious in the hotly contested battle for San Francisco International Airport’s 14-year International Terminal Duty Free and Luxury Stores lease. As Luke Barras-Hill hears, plans for a centralised security checkpoint and retail plaza at the terminal offer further growth opportunities.
International Terminal. Those plans include a post-security retail plaza.” SFO handled a record 55.8m
passengers last year and possesses ambitious plans to grow that figure through further retail innovation. “For our fiscal year starting in
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July 2019 we are forecasting +3% passenger growth,” Nashir tells TRBusiness. “This year, we are leasing 35 restaurants and stores, including at Terminal 1. “Each time we re-lease space or a
could hypothetically activate during the initial 14-year term, meaning if DFS built the facilities in year 10, it would operate the contract for a further one year in total. “The project has not been defined,
funded or scheduled,” Nashir makes clear. “We have developed very high level, conceptual plans for where a single, centrally located security checkpoint could be in our
MARCH 2018
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service contract, we almost always increase revenues. We are always looking for innovation as well and are presently trying to understand our opportunity around e-business.”
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Financials secure victory SFO admits that DFS’ financial package sealed the deal with an initial minimum annual guarantee of $42m plus a percentage rent financial offer covering 45.8% of gross revenues achieved up to and including $100,000,000.00; 41.8% of gross revenues from $100,000,000.01 up to and including $160,000,000.00;
won due to the financial offer put forth by DFS Group. DFS Group has a long history at SFO and we’re delighted they will continue with us.” «
“The evaluation panel was impressed with DFS Group’s knowledge surrounding their customer at SFO.”
Cheryl Nashir, Director, Revenue Development & Management, San Francisco International Airport
TRBUSINESS 31
percentage rent offer for this tender was 30%, and DFS offered a tiered rent structure starting at 45.8% of sales up to $100M, which exceeded the airport’s expectations,” says an airport source. Nashir adds: “DFS Group submitted, as did their competitors, a well- conceived proposal. “This solicitation, ultimately, was
plus 30% of gross revenues achieved over $160,000,000.00. “The minimum acceptable
Above: A strong financial offer backed by an inate understand of the passenger profile sealed the victory for DFS at SFO.
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