HomeMy WebLinkAbout2006-07-26 STAFF REPORTS 3A *PALM SpR
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c9L/FORN`P CITY COUNCIL STAFF REPORT
DATE: July 26, 2006 CONSENT AGENDA
SUBJECT: AIRPORT CONCESSION PROGRAM DEVELOPMENT PLAN —
RECEIVE AND FILE
FROM: David H. Ready, City Manager
BY: Aviation Department
SUMMARY
Staff is requesting Council to receive and file the attached Airport Concession Program
Development Plan. This plan will serve as a guideline for a comprehensive
development path working towards a significantly improved Airport concession program.
RECOMMENDATION:
1. Receive and file the Airport Concession Program Development Plan dated June
15, 2006.
STAFF ANALYSIS:
Council had previously approved the selection of Center for Airport Management, a
subsidiary of SH&E to develop a concession development plan for the Airport. The
results of CAM's planning and analysis are in the attached report entitled Airport
Concession Program Development Plan, dated June 15, 2006. Results and highlights
of the Plan include:
1. Providing dining and shopping options to emphasize regional tastes and flavors.
2. Creating design guidelines to provide more impact with an improved sense of
local community and culture.
3. Establish a regional theme including content of key annual area events and local
tourist attractions.
4. Optimize existing and future concession space consistent with the expansion and
contraction of seasonal passenger fluctuation.
5. Identified four distinct concession zones, which have been assessed against
anticipated passenger requirements, and include:
ITEM NO. A
City Council Staff Report
(July 25, 2006) — Page 2
(Airport Concession Plan)
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(a) Landside:
1. Develop a new Coffee Kiosk in the ticketing area
2. Redevelop the "Celebrity Bistro" into a cafe/bar concept
3. Add a specialty retail unit
4. Retain the existing newsstand location
(b) Main Garden Courtyard — Primary Concession Area:
1. Develop three food & beverage units with large overflow patio
seating area
2. Develop a small newsstand
3. Develop a "festival of carts" for peak season traffic
(c) Main Airside Terminal:
1. Redevelop the "Desert Classic Grille" as a cafe/bar concept
(d) New Regional Jet Terminal:
1. Add concession locations at the entrance to the new regional
terminal
2. Add a cafe/bar with interior and patio seating
3. Add a small newsstand
4. Provide space for seasonal carts
6. Revenue growth and passenger satisfaction goals will be driven by four key
factors:
a) A 69% increase in the size of permanent concession program
b) The creation of flexible space
c) Recapture of existing locations
d) Assumed enplanement growth to 885,000 by 2010
The Airport Commission, at its regularly scheduled meeting on June 7, 2006,
unanimously approved this plan.
The next step will be for staff to solicit an RFP and/or commence negotiations with the
current vendor to develop a proposal for council using the guidelines in the concession's
study. Any proposal will be incorporated into the reconstruction plan for the new
Regional Terminal and landscaped areas.
FISCAL IMPACT:
There is no fiscal impact at this time other than staff time required to commence an RFP
process. Ultimately, staff anticipates a positive increase in future concession revenues
in addition to non-airport capital improvement dollars being invested at the Palm Spring
International Airport at a future time subject to Council approval.
City Council Staff Report
(July 25, 2006) -- Page 3
(Airport Concession Plan)
Richard S. Walsh, A.A.E., Director of Aviation David H. Ready,City r
Attachments:
Airport Concession Program Development Plan
S _1.&E/C ]►M Airport Management Consultancy
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1 Prepared for:
Palm Springs International Airport
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The City of Palm Springs
Prepared by:
d SH&E/CAM
June 15, 2006
�I TABLE OF CONTENTS
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1. Executive Summary ...... 1
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Introduction.................................................................... ............................... 1
Key Findings and Recommendations.................................----------------------------1
2. Concession Program Goals.................................................... 3
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PSP's Economic Impact..................................................................................3
Concession Program Goals and Objectives....................................................4
3. Concept Alternatives Analysis............................................... 6
Concept Determination Methodology.............................................................6
iFood and Beverage Concepts....--...... .............................................. ............9
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RetailConcepts.............................................................................•--- I I
4. Concessions Plan........................
Primary Concession Areas............................................................................ 12
Concession.Plan Summary----------..................................................................12
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Zone I —Landside Terminal(Existing)........................................................14
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Zone 2-Main Garden Courtyard.......----------------- .........................................17
Zone 3—Main Airside Terminal(Existing)..................................................20
Zone 4—New Regional let Terminal(Courtyard)........................................22
5. Financial Analysis ....24
.............................................................
Introduction...................................................................................................24
SummaryResults.................................................. .......................................24
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Airport Concession Program Development Report 06-15-06 Page 1
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EXECUTIVE SUMMARY
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Palm Springs International Airport (PSP) has embarked on a program to expand its
terminal complex and concurrently create a contemporary passenger amenity
i program to meet the needs and wants of its expanding and changing passenger base_
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jThe aviation industry continues to face an interesting challenge as air traffic levels
nationwide now exceed the peak year passenger levels of 2000, wlrile most airlines
are still struggling to turn a profit. This disparate recovery of near-record airport
jtraffic combined with major airline financial losses is stimulating increased pressure
by carriers to lower all costs, including those incurred at airports. As airlines turn to
airports to reduce rates and charges and at the same time provide better service to
passengers, airports are aggressively pursuing opportunities to increase non-airline
revenues and to upgrade and improve facilities to meet growing demand. Our work
and recommendations strive to find the balance between providing a great passenger
experience,producing revenue to the airport, and containing or reducing the net cost
of operation at PSP to the airlines.
Building on the sizing and preliminary programming recommendations outlined in
Simat, Helliesen & Eichner, Inc./The Center for Airport Management's
(SH&E/CAM's) Demand Analysis Report,provided under separate cover,this report
will further develop and define preliminary concession plan details.
■ The terminal complex concession plan includes four distinct concession
shopping and dining zones;the existing landside pre-security terminal
building, the open-air main garden courtyard,the existing main secure
terminal, and the new regional jet terminal. As mentioned in an earlier
report,the four zones arc necessary because of the physical layout of the
terminal complex and the need to provide services in each zone for
passengers.
Airport Concession Program Development Report 06-15-06 Page 1
■ It is recommended that the food and beverage concessions be anchored by a
066/bar concept in each of the four zones. Each of these units will offer
three day-part service,with varying themes and menu offerings in each
location. Duplication of menu items should be minimized.
d A full-year concession operations plan should provide sufficient comfortable,
conditioned interior shopping and dining space to accommodate the demand
when outdoor dining or shopping could be uncomfortable. All cafe/bar
locations should include adequately sized interior seating areas in addition to
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exterior seating areas.
I ■ The main garden courtyard concession locations are positioned to be
immediately visible to passengers as they exit the security screening area,at
the point that traffic divides between the two terminals;permanent
concessions are located on the right,with seasonal carts clustered to the left.
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This zone now becomes the primary concession area for the terminal
complex,as there will be greater exposure to all passengers here than in any
other secure area of the terminal complex. It is important that concession
' amenity signage be located in this area to inform and guide passengers to
' concession areas_
■ Concession locations,sizes, and concepts in the existing main secure
i terminal will remain largely unchanged with the exception of the Desert
Classic Grille being converted into a cafelbar. While the Desert Classic
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Grille is generally configured as a caf6/bar today,wait staff and table service
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levels currently do not ineet service levels typically associated with a
cafe/bar concept.
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M The regional jet terminal concessions are proposed to be located in the
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garden courtyard at the cntrancc to the terminal;permanent concessions are
located on the right,with seasonal carts clustered to the left.
■ Design consideration should be given to the two new garden courtyard
concession areas with the goal of developing a patio marketplace theme for
these areas that may expand and contract to accommodate passenger levels.
o For the two existing concession areas in the laadside terminal and existing
main terminal,there is an opportunity to develop more dynamic storefront
design criteria that will help to visually unify the concession program and
draw more attention from passengers.
Airport Concession Program Development Report 05-15-06 Page 2
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CONCESSION PROGRAM GOALS
Travelers come to the Coachella Valley as vacationers, for business, to attend
conventions, or for personal reasons, such as to visit relatives. The airport service
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area includes a population base of more than one million, and extends £com the
communities of Yucca Valley and Twentynine Palms on the north; Banning and
Beaumont to the west; Hemet to the south; and Blythe to the east. The state of
i California grew at a rate of 1.2% in 2005, adding 444,000 new residents for a total
i estimated population of nearly 37.2 million persons as of January 1, 2006. As of
January 1, 2006, the ranking of the state's 10 most populous counties included
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i Riverside. Riverside County grew by 3% during 2005. 2005 marked the fifth
j consecutive year that Riverside County ranked in the state's top 10 on all three
measures — size, numerical change and percent change. Riverside County is now
ranked 2°' out of all 58 counties in terms of rate of population increase. The county
added 65,019 new residents in 2005, bringing its population to an estimated 1,953
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million on January 1, 2006. The Coachella Valley added 17,016 new permanent
residents in 2005, bringing the grand total to 411,997. The valley boasted 4 of the
top 10 fastest growing cities in terms of percentage increase in Riverside County.
Three valley cities were among the 25 fastest growing cities in California. The
Valley has grown astronomically over the past few decades. The permanent
population has increased 237% since the 1980 census, when there were 122,196
residents. It has grown 78% since the 1990 census, when the population was
230,865. And it has risen 29.5% since the 2000 census when the number of residents
stood at 318,125. In addition to the permanent population, the valley is home to a
substantial seasonal population. The seasonal population in the valley totaled
roughly 146,000 at the beginning of 2006_ Combine the seasonal residents with the
permanent population of almost 412,000 and the number of people residing in the
valley during the peak "season" months is roughly 558,000.1 By 2010, the value
added contribution to the regional economy due to the presence of the airport will
exceed$1.6 billion.2
'Wheeler's Desert Letter,May 15 2006,Volume 48 Number 9
3 Excerpted from PSTs Economic Impact Statement
Airport Concession Program Development Report 06-15.06 Page 3
Palm Springs International Airport is a valuable asset to the
citizens of its service area, linking the Coachella Valley region
with California, the nation and the world.3
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Like many airports that understand the inherent potential of an optimized concession
program, PSP recognizes the impact a concession program can have on customer
satisfaction and revenue. To that end, SH&E/CAM has prepared a preliminary
outline of program goals and objectives, for your review and revision, to help define
j - program characteristics going forward.
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■ Optimize customer satisfaction by providing:
— A variety of interesting and appropriate dining and shopping options.
— A combination of local and national brands.
— Concession zones placed for optimal visibility and access.
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— Eye-catching store design, signage and merchandising.
— A concession management program to support world-class customer
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service that includes measurable,quantifiable performance standards.
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■ Optimize concession revenue by:
Establishing business terms that are commensurate to quality and
quantity of traffic for any new agreement.
Allowing and encouraging seasonal expansion to serve peak season
demand.
— Identifying and managing opportunities to increase revenue.
'Soarct PSP
Airport Concession Program Development Report 06-15-06 Page 4
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■ Create inviting concessions that capture the spirit of Palm Springs and the
greater Coachella Valley-a sense of place-by:
- Establishing design criteria that integrates with the airport and reflects
the unique characteristics of the region.
- Menu offerings and merchandise assortments should reflect an
appropriate level of regional themes,interests and tastes.
- Encourage local business and DBE participation.
- Develop ways to support key area events through product assortment,
temporary concessions and other marketing opportunities.
Airport Concession Program Development Report 06-15-06 Page 5
CONCEPT ALTERNATIVES ANALYSIS
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Determining concept selection expands on the five concession planning principles,
outlined in the Concessions Planning Principles Report, provided under separate
cover. For PSP, concept analysis involved the review of 11 areas that impact
concession performance.
Z. Passenger Shopping and Dining Behavior
The types of concession units;the specific retail or food service concepts,the number
of units, the individual unit sizes, and the locations and adjacencies, are based
primarily on analyses of passenger shopping and dining behavior in airport terminals,
adjusted for the unique characteristics of PSP; existing and planned facilities, existing
concessions,traffic flow, safety and operational conditions.
2. Unique Air Travel Motivators
Over years of study we have found that passenger behavior in airport terminals is
driven by a variety of relatively traditional demographic and psychographfc
(lifestyle) characteristics that are significantly influenced by air travel related
motivators and environmental conditions.
3.Dwell Time Impact on Impulse and Necessity Purchasing
Purchasing behavior is also driven by the"dwell time,"the amount of time that each
passenger has in the terminal prior to boarding. This dwell time greatly affects how
much time will be available for "impulse" and "entertainment" shopping, after the
"necessity" items are purchased, once passengers have become "travel ready" by
obtaining boarding passes, etc. Necessity items include most products found in
airport`newsstands."
4 Food Service Analysia
For a segment of the population, "necessity" also means food service. The selection
of food service concept types (e.g_, eafd/bar, quick serve,walk-away snacks, sit down
dining) is greatly driven by the percent of the airport terminal population that
perceives that it has 20 minutes, or 6 minutes, or 45 minutes of additional available
time.
With regard to food service, the time of day of flight departures is also factored in;
increasing projected "capture" if they are near traditional meal times. In the case of
Airport Concession Program Development Report 06-15-06 Page 6
PSP, the current peak season flight schedule includes early morning and noon
departure peaks with flights extending through the early evening, placing the
majority of enplancments in the terminal around breakfast, lunch and some early
dinner times.
S. Unit Productivity
The productivity (transactions per hour capability) of each particular concept is
analyzed, capture and peak hour passenger load is factored in, and the appropriate
number of units,per concept type, are planned.
6. Stage Length
The importance of understanding the percentage of flights lasting longer than two
hours versus shorter regional/commuter flights stems from the belief that the
behavioral motivation of passengers differs, depending on length of flight, especially
with respect to food and beverage purchases. With minimal food service aboard
flights today, passengers want to ensure that they will not be left hungry during their
longer haul flight. As a result, airports have seen an increase in carry-on meals and
food and beverage sales in general as passengers ensure they are well fed before
departing.
As the percentage of flights longer than two hours at PSP increases significantly
during the peak season, this was a consideration that impacted both permanent and
temporary program sizing.
7. Segment"Size
The analysis of the number of differently motivated potential customer segments,and
the size of each segment incorporates, as well as passengers, the airport and airline
(including flight crew) employee base, the meeter-greeter base (for arriving
passengers) and the well-wisher base (for departing passengers). The size of these
latter two segments varies with whether the passengers are business or leisure and
varies with the nationality of the traveler. Well-wishers are particularly good food
service customers, for example.
8. Sizing of Units
Each concept is sized to reflect the most viable unit size, and then adjusted as
necessary to reflect local constraints and conditions. The objective is to maximize
gross sales (revenue is not generated per square foot, but is paid as a percentage of
gross sales), while returning an acceptable concessionaire profit. Sizing is
established so that the operator can display the amount and variety of product
necessary to achieve revenue and service objectives.
Airport Concession Program Development Report 06-15-06 Page 7
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• 9. Locations
i A critical consideration in concept analysis includes shops that will have the highest
capture, and concepts that are considered necessity or destination concepts, and
would therefore be visited first by the time constrained shoppers (or shoppers who
perceive themselves to be time constrained).
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I 10.Adjacencies
Adjacency considerations look at concession types and sub-types,and concept image,
along with destination and necessity shops. A shopper flow is established with
complementary (from price point and shopper motivation perspectives) shops placed
adjacent to each other. When a shopper says no to one concept,the next concept they
see should be within the range of their capabilities and desires.
At a more detailed level,adjacency analyses also consider a few factors:
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1. Concepts like newsstands, and certain well-recognized branded units act as
a draw. Their strategic placement can draw passengers past other types of
' units that have traditionally lower capture rates.
2. SH&FJCAM studies the ability to place stores that will most interest men
near stores that most interest women. That way couples can both shop
rather than waiting for each other. For PSP,this should be considered with
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determining seasonal cart concept types and locations.
I The ability to locate stores near restrooms is considered as well as these
units offer the opportunity to shop while waiting for a companion.
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4. Proximity and visual connectivity to the food locations is important, as
passengers will frequently shop after they dine.
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II.Shopping "Neighborhoods"
Surromiding the shopper, in essence creating small clusters of shopping
neighborhoods is how travelers can be converted to shoppers. The result is that, in
effect, neighborhoods or clusters of concessions are created_ Clustering amenities
conveys to the subconscious that this is the place to shop and dine. This serves to
maintain the passenger (or other terminal user) in the shopping mode. (Maintaining
the passenger in the shopping mode,within the context of their stress about their time
of departure, is why the well-designed location of FIDS monitors is so critical to a
high performance airport shopping hall.)
Airport Concession Program Development Report 06-1"6 Page 8
When looking at food and beverage concept options for PSP, the following issues
were considered critical in helping to define which sub-types would be most relevant
to the PSP passenger:
e Overall Program Size—a smaller airport cannot support a broad assortment
of all food and beverage sub-types-
® Strong Seasonal Shifts--selected units should be able to expand and contract
during peak and off seasons without being overcrowded during peak periods
or appear to be partially shuttered during slow seasons.
• Customer Demographics—predominantly domestic passengers, a high ratio
of leisure travelers with short to medium length flights.
■ Three Day-Part Operations—flights schedules throughout the day with peaks
in the early morning and noon mean that the primary food and beverage
concepts need to support a three day-part operation for providing breakfast,
lunch and dinner.
Casual Sit-down
This category is characterized by table service, an extensive menu and a total process
time, fzom greeting to good-bye, of about 45 minutes, which can be shortened by
efficient operators in an airport environment. The food to alcoholic beverage ratio is
about 80% food and 20% alcoholic beverages. While there is the existing landside
sit-down restaurant that also has counter/diner type service and a close by bar,
SH&E/CAM is recommending the redevelopment of this existing space to a well-
defined and easily identifiable look that clearly states what is being served at this
location. The ultimate concept could be a sit-down restaurant or a caf6/bar as
described below.
Caf lBars
This category includes the traditional airport lounges (bars) with little or no food and
cafe bars that may sell a minimum of 45% food and often up to 60% food. The
distinction between caf6 bars and sit-down restaurants is beginning to blur as casual
sit-down concepts like TOITriday's and Chilis' are designing scaled down units to
place in non-traditional locations like airports, stadiums, and malls. However, it can
be said that the speed of service and menu selection in caf6 bars is distinctly different
than their larger format counter parts. Each of the proposed four concession zones at
PSP will be anchored by a caf6bar concept. After a thorough review of concept type
Airport Concession Program Development Report 06-15-06 Page 9
alternatives, it is SH&EICAM's recommendation that a caf&bar would best address
the four key issues outlined above.
■ Provides climate controlled sit down seating for leisure travelers with more
dwell time while providing faster,more flexible throughput than a traditional
sit down restaurant.
• Operations will be sized to work during slower seasons and be configured to
allow for overflow patio seating to handle peak season capacity.
■ Menu offerings can be easily adjusted based on what proves to be popular
with PSP travelers with the range of offerings increased during peak season.
• Three day-part service will be a requirement to ensure that passenger needs
can be met throughout the day,beginning with coffee bar and breakfast
options for early morning
departures. tri'' el trT'
■ All items can be purchased
to go with cant'-on
packaging.
IN Theming and content will rc
be adjusted for each
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location to ensure the
widest possible variety Of
options as passengers „-,ti. .,.
migrate through the airport. Southwest themed Card/Bar-conceptual drawing
Quick Serve
Quick serve is what is generally known as fast food. It is items served over a counter `
and the entire purchasing and eating process can take less than 20 minutes. Often
clustered in food court settings in larger airports, SId&EXAM is recommending that
PSP have a single quick service unit located in a high traffic airside location,adjacent
to a caf&bar and walk away unit- This concept must also be able to serve breakfast.
Airport Concession Program Development Report 06-15-06 Page 10
Walk Away
Walk away foods are items that a passenger could conceivably eat while walling or
sitting at the gate. Despite their low average transaction values, walk away food
service is important to PSP's concept mix because walk
away concepts typically represent the last and perhaps only
opportunity for capturing travelers who have the shortest
dwell times.
Walk away units typically comprise concepts such as coffee,
ice cream,yogurt,pretzels, etc.
Average transaction values in the walk away segment are typically less than 60% of
those in the quickserve segment so revenues are being lost to passengers who are
capable of purchasing more substantive fare if other quick serve or cafe bar choices
are unavailable. Each of the zones at PSP that will include a walk-away unit will also
include a caf6tbar concept.
Newsstands
Necessity newsstands, whose product mix is expected to focus
on reading materials,packaged snacks, candies and beverages,
and bealth and beauty aids, are distributed throughout the
airport. The merchandise mix will vary in each location
dependent on adjacencies, store size and the role each store is
required to play in that particular location.
For PSP, it is recommended that two additional newsstands be added, one in the
Main Garden Courtyard, adjacent to the food and beverage units and the other in the
New Regional Jet Terminal, adjacent to the proposed caf&bar_ These units would
cant'an assortment of periodicals, books, snacks, non-alcoholic beverages, sundries,
and health and beauty aids. They would not carry gift and souvenir items like hats
and t-shirts.
Specialty Retail
Specialty retail includes stores that focus on a somewhat limited product area and
expertise operating from carts, kiosks and in-line stores. Two specialty retail
locations have been included in the plan, one airside and one landside. Additionally,
a IdosldRMU location has been included with space identified to add additional
ldosk/RMU locations during the winter peak season months.
Airport Concession Program Development Report 06-15-06 Page 11
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CONCESSIONS PLAN
Four Distinct Shopping and pining Zones
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As originally introduced in the Demand Analysis Report, SH&E/CAM has identified
four distinct concession zones at PSP_
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m Landside Terminal(Existing)
B Main Garden Courtyard
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■ Main Airside Terminal (Existing)
■ New Regional Jet Terminal(Courtyard)
Diagram IVA --PSP Concession location Study
OF PSP concgs5i06
{ocation5ftidy
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The proposed sizing of the PSP Concession Program, detailed under separate cover in
the Demand Analysis Report, recommended 14,500 square feet of space with an
additional 2,500 square feet added during the peak winter months. The expanded
space would be comprised of patio seating for the cafe/bars and carts for walk away
Airport concession Program Development Report 06-15-06 Page 12
food and beverage Concepts and carts for specialty retail offerings. A summary
outline of the recommended concession plan for PSP is shown in Table 1VA.
Table IVA —PSP Concession Plan Summary
'LoCation Square Feet SquaraFnet Type
Zono 1-Landside
L-ZIA Mckobng) 200 200 F&B Walk Away CoffcclPastry
L-Z1.2(Center North) 31100 3,100 F&B CafbJBar CafA/Bar
L-Zl-$(Center South) 600 600 Recall Nex'S Newsstand
L-ZIA(Center North) 1,000 1,000 Retail Spodalty Retail Logo/5ponnvcadAlhleLt
Zone 1 Total 4.900 4,900
Zone 2-Main Garden Courtyard
A-Z2.1(Main Courtyard) 2,90 250 F&S Walk Away Ice Crea nffagun/Dessen
A-Z2 Cart 1(Main Courtyard) 0 160 F&B Walk Awry Coffee Pastry
A-Z2 Cart 2(Main Courtyard) 0 160 F&B Walk Awry Bulk Candy/Nuts
A•Z2.2(Main Courtyard) 1.000 1,00D F&B Quick Serve Burger
A-72.3(Main Courtyard F&1.900 2,600 B CafE/Bar CafFJBar
A-Z2.4(Main Courtyard)_ 225 225 Retail News News=and
A-Z2 Cart 3(Main Courtyard) 0 240 Retail Retall Regional Gifts
A-Z2 Can (Maln Courtyard) 0 23$ Retail —Retall Fashlon Jewelryfwatches
A-Z2 Can 5(Main Courtyard) 0 235 Retail Retail Accessories
Zone 2 Total 3,375 5,105
Zane 3,Main Terminal
A-Z3.1-(Main Terminal) 550 550 F&B Walk Away ColleelPastry
A-Z3.2-(Win Terminal) 1.900 1,900 F&B Cafa/Bar cafplBar
A-Z3.3-(Main Terminal) 400 400 Retail News Newsstand
A-Z3.4-(Main Terminal) 150 150 Retail Specialty Retall Regional GBts
A-Z3.4-(Main Terminal) 850 850 Retail News News/Gifts
A-Z3.5-(Main Terminal) 11050 1.050 Retail Specialty Retail LogolSporlswear/Athletic
Zone 8 Total 4,900 000
Tone 4-Regional Jet Terminal
A-T4.1(South Courtyard) 1.100 1.500 F&B Caf6 aar Caf6Zar
A-Z4 Cart 1(South Courtyard) 0 170 F&B Walk Away Ice CreamfYogurVQessert
A-Z4 Cart 2(South Courtyard) 0 200 Retail Specialty Retail Regional Gi is
A-Z4.2(South Courtyard) 225 225 Retall Naws Newsstand
Zone 4 Total 1,325 2,095
Overall Total 1 14.500 17,000
Airport Concession Program Development Report 06-15-06 Page 13
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Proposed Concession Program
The Landside Concession Program is comprised of four concession locations: a walk
away coffee kiosk, a newsstand,a specialty retail unit and a card bar.
Food and Beverage Units
■ Walk Away Coffee:This location would be a 200 square foot kiosk located
against the west wall opposite from the ticket counters,positioned midway
between the two primary entrances of the south arm of the main terminal as
shown in Diagram 1V.2.
The coffee unit should be built out with a surrounding overhead perimeter
soffit to it can be easily spotted by passengers from anywhere in the ticketing
area; signage should be visible on both sides of the unit(north and south)so
that it can be spotted from a distance. Passengers will be able to grab a hot
or iced coffee or tea beverage before getting into the ticketing line, or after
they have checked their luggage as they begin migrating towards their gate.
This type of location is also frequented by landside airport employees and
airport related employees like litho/taxi drivers,rental car company
employees, and other ground transportation providers.
Diagram IV.2—Proposed Walk Away Coffee Location
Coffee
Kiosk
Location
4 Location diagram is conceptual only-all dimensions are approximate.
Airport Concession Program Development Report 06-15-06 Page 14
n Caf/Bar:The cafd bar would be located in the space currently occupied by
the Celebrity Bistro. The space should be reconfigured,to the extent
possible,to maximize the view of arriving passengers from the seating area,
to encourage meeters-greeters to enjoy a drink and/or snack while waiting for
their guests to arrive.
Positioning a flight
information display -
(FIDS)to be easily seen
from inside the caWbar
dining room will help to
hold outbound
passengers and meeters-
greeters who ought
otherwise leave in search �•
of updated flight
Tommy Bahama Caf€
information. The Gardens on El Paseo,Palm Desert,California
Theming
To ensure the PSP passengers are presented with a diverse assortment of dining
options, it is important that each of the four cafUbars have different themes with
some unique offerings in each location- An example of a concept that could work in
this location is a Tommy Bahama cafd. Tommy Bahama has recently launched a
cafWemporium concept; one of six existing locations is in Palm Desert.
Retail Units
■ Newsstand:The newsstand location would remain where it is currently
positioned with the same amount of space, as shown in Diagram rV.3. To
create a more cohesive shopping zone, the newsstand can be visually
connected to the cafe/bar and specialty retail unit using design criteria that
create a common look or appearance. Large, lighted,multi-dimensional
exterior storefront signs can be used to attract attention and create visual
excitement.
e Specialty Detail: The specialty retail unit will be a new addition to the
landside area. Located across from(north of)the newsstand,this location
would be adjacent to the cafe/bar. For the landside specialty retail location
SH&E/CAM felt that the concept should include a set of specific criteria:
— The concept should appeal to both travelers and locals(meeters-greeters
and well-wishers) alike.
Airport Concession Program Development Report 06-15-06 Page 15
1
1
I
I
1 — The brand should be known in the Coachella Valley area and familiar to
1 visitors from across the country.
— The store should reflect the relaxed,warm-weather, golf-resort leisure
aspects of the area that are so popular with locals and visitors alike-
For this location, SH&E/CAM is recommending the logo/sportswear/athletic
/active wear concept category. An example of a brand in this category that
meets the three criteria outlined above is Tommy Bahama. Tommy Bahama
is an established brand across the
US and Canada. Stores cant'
merchandise for men and
women. There are thirty-Five
Tommy Bahama stores within a
twenty-five mile radius of PSP.
Both brand and product
assortments are a good fit with
the warm weather golf-resort Tommy Bahama Storefront Design
atmosphere of Palm Springs.
Diagram IV.3—Zone 1: Main Landside Terminal Concessions5
w'r�iaFn` rr, m, � •+' � rlr;�f�r�r:�� .i �i.,,� r.�:�"rr� `�� "
w 2 h
„�+Rp ,e1$�� {Z r r rvl' • i `r ry m�i'
Y�: r�•fi; if yY, y ni.. .r.'.. i 'tiA:W M`W.`;.'Fr .,.�1� vr Yr �A�'r �"t,9
.,r�r
s Location diagnun is conceptual only-all dimensions are approximate.
Airport Concession Program Development Report 06-15-06 Page 16
fl E A A, DF-N GGU U
Proposed Concession Program
Zone 2, the main garden courtyard, includes four permanent concessions, four
seasonal locations and a peak season overflow patio seating area. The four main
concessions include a cafd/bar, a quick serve location, a walk away unit and a
newsstand. These locations are located on the south side of the courtyard, so that
they are clearly visible as passengers exit the security screening at the point where
traffic divides between the existing terminal and the new regional jet terminal.
Zone 2 Design Considerations
Climate Controlled Interiors
The four permanent concessions should be housed in a climate-controlled building
that includes a seating area for the cafelbar. To facilitate browsing across concepts, it
would help to have interior pass through walkways so that a passenger shopping in
the newsstand can step into the quick serve without having to go outside. It's
important that doors to these units remain closed during hot weather so that the
interior temperature can be maintained at a comfortable level. Units should either
have hinged doors or, more ideally, automatic sliding doors. During cooler seasons,
the doors can remain opened, but interior ambient temperature ranges should be
mandated,regardless of season.
Patio/Courtyard T'heming
The patio/courtyard area that extends between the permanent and seasonal locations
should be designed to convey the image of a relaxed outdoor market with plenty of
patio seating. Examples of some marketplace patio concepts are shown in graphic
TV.1 on the following page.
J
;a4 J
L
Paco Marketplace-Conceptual Drawing
Airport Concession Program Development Report 06-15-06 Page 17
pq
PIC
iiFR
HE
RON all
I� }� � � Ii+/7 �� • rr PA3T�t�^gy�pp „ t
ANKME,=�
Food and Beverage Units
■ Caf&Bar:Design and theme should be different from other ca£elbar locations
at PSP.
■ Quick Serve:With only one quick serve at PSP, SH&E/CAM recommends
that this concept be programmed as a burger unit-
® Walk Away: Au iec cream/yogurt/dessert concept with a variety of cool
refieshing options should be a popular choice and a good alternative to the
coffee options located
throughout the airport.
■ Seasonal Carts:The two
food and beverage carts
could feature a coffee,
bulk nuts and candy or
perhaps a regionally
popular concept.
Retail Units Cafel6ar—Conceptual Drawing
• Design criteria could be structured to achieve primary design objectives
while allowing for flexible fixturing. Interior finish options that could be
achieved with reasonable capital investment.
■ Newsstand: This would be a year round,air-conditioned location,nested in
with the three permanent food and beverage concepts.
■ Seasonal Carts:Three specialty retail carts can be,added during the peals
season to sell concepts like regional gifts, fashion jewelry/watches and
accessories, for example, sunglasses.
Examples of retail concepts with high
visual impact using moderate finishes
and fixtures
Airport Concession Program Development Report 05-15-06 Page 19
i
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IX Ems__
i
Proposed Concession Program
The configuration of Zone 3, in the existing main terminal, would remain similar in
terms of size and location. The sit down restaurant could convert to a caff/bar
concept,but the overall assortment of concessions would not change significantly yet
their identity and concepts could be improved to increase capture and sales.
Zone 3 Design Considerations
Climate Controlled Interiors
The same issues surrounding air-conditioned locations outlined earlier in this report
apply to the existing terminal as well. All concessions, with die exception of the
regional gifts cart, should provide stable,comfortable interior temperatures. Doors to
these units should either have hinged doors or,more ideally, automatic sliding doors.
During cooler seasons,the dears can remain opened,but interior ambient temperature
ranges should be mandated,regardless of season.
Resign Criteria
The exterior storefront design for each location should incorporate updated criteria to
draw more attention to these concessions. Larger, lighted, more colorful and multi-
dimensional signs will add excitement to the terminal and are likely to draw more
interest from passengers. This is particularly important given that the stores will not
be able to have wide, open storefront access/visibility during warm weather. Tenant
design guidelines can be balanced to provide impactful designs while allowing
enough flexibility to ensure that capital investment requirements are reasonable.
u
x:
Examples of retail Concepts with high
visual Impact using moderate finishes
and fixtures
Airport Concession Program Development Report 06-15-06 Page 20
��- f`�
i;•> � �.:
.`'��i_�; e ccu�:,.'" ��7Y ,1� .:��iJl Gip A
�� rl• �___+++"'111 a r��r ��� �a;'; .� L •!..`�,� � I h �
x;fy .:; ,� �Y(:fa a w=:
rr r��"�.p� - a•
^j^�}iJ
1
� � �- �� - �
� � - � �
•� -• 1�.•• .1•aC�li• .'f1
+���� 4+
♦� '�
I
`f �
�+� - T•M
R �� �
y
� 1 I I I
"•ram�
it I • • 11 i
•� •,�� ' �� 1 v
1
_ � ,� ��
,,
rL� ��4 '
� ���-
.. �- - .� - 1. 1. -
i
Food and Beverage Units
i ■ Cafe Bar:This unit will be located in the space currently occupied by the
Desert Classic Grille. Existing nearby patio seating would continue to
provide seating for the caWbar. Vdhile the Desert Classic Grille is generally
configured as a caf@lbar today,wait staff and table service levels currently do
not meet service levels typically associated with a caf6bar concept. Ideally
arriving patrons would be greeted and shown to a table—including tables
located in the two patio seating areas just west of the cafelbar entrance.
11 Walk Away: This unit will be located in the space currently occupied by the
Palm Springs Coffee Company_ SII&E/CAM recommends that this location
continue as a coffee/pastry concept.
Retail Units
■ News:This unit would the same size and in the same location as the existing
Desert News.
■ Specialty Retail—Ugo/Sportswear/Athletic:This location is located where
the PGA Golf Tour store is currently.
■ Specialty Retail—Regional Gifts/Convenience:This location is located
where the Desert Marketplace is currently located. Product mix would
include a board of assortment of regional gifts,snacks,bottled drinks,
sundries,and candy.
■ Specialty Retail—Regional Gifts: This location would be a cart that could
operate all year or just during peak season. It would feature an assortment of
unique,regional gifts and accessories.
Proposed Concession Program
Concession locations for the new regional jet terminal are located in the garden
courtyard at the entrance to the terminal. This program would be a smaller version of
the concession program in the main garden courtyard and the same design
considerations, climate controlled interiors and patio/courtyard theming, would
apply.
Airport Concession Program Development Report 06-15-06 Page 22
i
l
Food and Beverage Units
1 M Caf&Bar This would be the smallest of the caWbars at PSP. Patio seating is
located immediately adjacent to this area and should be designed to possibly
convert to a larger indoor dining area, if future volume wan-ants the
' expansion. Additional peak season seating can be added to the courtyard
I area.
I
i
r Seasonal Cart:This cart would feature ice cream/frozen yogurt and cold
i
beverages. During the off-season,these items could be integrated into the
caf lbar menu.
Retail Units
* Dews: A small newsstand is positioned between the caMar and the
restrooms. It is possible that this could be integrated into the caf6fbar
operation,eliminating the need to create two separate spaces.
w Seasonal Cart: This cart would offer an assortment of regional gifts and
accessories during the peak season.
Diagram I11.6—Zone 4: New Regional Jet Terminal Concessions
e
`v
75E GCGIP'MITS(c0uRT1'u+0) `� C rr�.
252 OCLl1PhN15(HotpR `� {— r �
1RID DG4VPW7I5 CU ) 51' RPW O
Ivl
$E3541'l31 192' PROMn
at eatm`
w_<<arC� I ,••
CafeBar
r-t---------u News ✓ !! 1
--- -L'^--' 41" p��� !
42' n1 am ,
I �
.S71RED
202 vv 1 ♦ tc 1 1 !
1 v.
Location diagram is conceptual only-all dimensions are approximate.
Airport Concession Program Development Report 06-15-06 Page 23
FINANCIAL ANALYSIS
This chapter provides preliminary financial analysis for the proposed concession
program at PSP. This information will help to provide an understanding of the
benefits to each party to better ensure that negotiation efforts result in an agreement
that will be beneficial for all parties.
The financial analysis builds on the concession layout and concept plan through, the
development of proformas for each proposed location. The availability of detailed
i
proformas, with projected sales and revenue information, will provide PSP with a
realistic range of possibilities for the negotiating process.
I
I
For each proposed concession location at PSP a separate proforma. has been
developed and can be found at the back of this chapter. Proformas are summarized in
Table V.1 on the following page.
Food&Beverage
Total annual sales for all food & beverage concepts are projected at $4,852,094,
generating sales per enplaning passenger (SEP) of $5.48 based on projected
enplanements of 885,000. Total EBITDA after deducting cost of goods, operating
expenses and fixed costs is $919,619 or 19-0% of total sales. An SEP of $5.48
represents a significaut increase over the 2004/2005 SEP of$2.84. As discussed in
the Existing Conditions report, there is d real opportunity for airside food and
beverage growth at PSP. The right concession mix (concepts, locations and sizes),
increased seasonal flexibility, eye-catching designs and great customer service are the
keys to increasing food and beverage sales at PSP.
Retail
Total annual sales for all retail concepts are projected at S3,992,720, generating an
SEP of$4,52 based on enplanements of 885,000. Total EBITDA.after deducting cost
of goods, operating expenses and fixed costs is $662,328 or 16.6%of total sales. The
addition of new locations, improvements to the current product mix and a more
flexible seasonal program will help PSP increase retail sales from the SEP of$3.71
2004/2005.
Airport Concession Program Development Report 06-15-06 Page 24
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Tots[PSP Concession Prograar-Aft Units,All Concepts
Total combined sales for all concessions are projected at $8,844,814, generating an
SEP of$10.00 based on projected enplanemeats of 885,000. Total EBITDA after
deducting cost of goods, operating expenses and fixed costs is projected at
$1,581,967 or 17.9%of total sales.
Table VA --PSP Total Program Summary Proforma: F&B and Retail
All F&B All Retall Tand PSP Program
All F&B Concepts All Retail Concepts All Units.All Concc is
Location Entire Airport Entire Alport Entire Airport
770,lr00r?'J1;r59P 4,5tl0-iA 10 ".''r'^,;;,�',','':-14;$Or-l7,000
Sales per EPAX I SSA $4.51 $9,99
"ZantdTd laniitl!'rdsSul Vets. 885000. g8S,000
Amount % Amount % Amount
GROSSSALES
";'-'C o}s; 'iil�s,;Foua:S4, a4-alco loT:. ',,S 4,313,129,. -%9% ;S - O:l1:jv., ,�4}'v29 49,&%
Gross Sales•Alcohol 53%965 11.1% - 0.0% 538,965 6.1
0.O-W 3',992,1,20' .100,0%7..°',7,991:7$0 45-1%
Total Sales 4,952,094 100.0% 3,992,720 100.0% 8,844,914 100.0%
"Cps ice(('.oads.,Tood&'t'a'oa+,�ltalioT?' ` L,09S,R81,„':"c�5.dti; - '0;0%.,;%-�i3O�5,08t 25A%
Cost ofGoods-Ncohol 97,014 18.0% - 0.0% 97,014 18.0%
',i`+ Co"sfo rG06tTs r TlEheil ."S,.•i<'Er` - a.,0.0'k �} 470.6.031, 42i78%. -,i'i1706.033 . 42.7%
Total Caetofsalos 1.192,095 7A.6% 1,70G033 42,7% 21893,128 32.9%
Gross Income S 3659,99 75-4% S 2,286687 573% S 5946.68G 67.2%
OPEEATING EXPENSES
Variable Expenses
. :;'�'411: .41,'•. •�: Y,3,9�adG„^,i,'f,8..% ...050,QU0;, .1'6:39'a_=':,it:2,U47.900_ 23,f%
Payroll Taxes&Benefits _ 306,878 63% 143,000 3.6% 449,978 5,PG
n.:�,,.
Diicgt'OFKrtltlnkff' Pens I,;'.::;;,:,' ,.-,�21:a03`.. ";,?.5.'��" .."%4:&16: '�7._GS j.� .'y,L 226119: 2.6%
Credit Card Discount 27.966 0.6% 39$27 1.0% 67.893 0.8%
.,,4:MsiYcijnjJFrancliisci'j;'i;, i' :.i;i. ,�fRe�$5-:':.r,I.OY:`: - .:S'9AY.1.:;�a�..�"-50�6$5.• , 0,6%
Utilities 114.000 2.3% 28,800 4.7% 142.800 1,6%
l;`,`,s;,ft,'dipiiu}Ycr4vt&;�Qci%cC�lr':"'S:, -s 9'I�,b4 ,:.,+va:p°" .7,4,855`,. ',2:a' __'',"•: M'89 ', :2.07.,
Reserve for Replacements 121,303 2.5% 61,876 1.5% 193,179 2.1%
81,83$:., ,&b
Repairs&Maintenance 62,527 1.3% 19,963 OJ.A 82,490 0.9%
Total Controllable Ex eosaa 7.369.335 48.9% 1,210,076 303% 3579461 40.51%
Yncome Before Fixed Casts S I 90,614 26,6% S 1,07G 611 E7 Q% S 2,367.225 26.9%
Fixed CosLs
„ •.�lient" .�,,�,: 6 ;r , ,255,f,35"+�' "e5r7,%--,�, ',3,5',4�"/3:. ..g11�f,���,i�G1�.3.S,S - . 6.9.';S
Distribution&Storage 0.0% 0.0% 0.0%
.,. 25u1'F'rtlatRaaCy,t,q,t,�,3;7i,b.l.✓s ':dl '58.n„ r.9rl,
Pmperty Taxes 62.940 13% 32,460 0.6% 95.400 1,1%
.,..,P Ins"tir,L'`icti::".:;..ri, .�"..._.,. "",42i4S0:".s.:j^1Tj,... ,,• ,:2YU50`p°,�,,::0:7%":`.,"..74500, :-.0,'9%
Total rued Casts 370.975 7.6% 414,283 IO.A% 785,258 8.91/.
EBLTI7A
Earnings Before tnlerest.Taxes,
nepracintion,&Amor[irAtion S 919,639 19.0% S 662,328 16.6% $ IMI.967 17-9•11.
Airport Concession Program Development Report 06-15-06 Page 25
General Limiting Conditions
No warranty or representation is made by the author of this ieport concerning the
projections made herein. The author of this publication has assumed that the
information, records and materials fim fished by the airport, airlines, vendors and
others are correct without any independent verification, and that the underlying
i assumptions regarding elements such as but not limited to enplanement quantity and
quality, store location and design, concept and concessionaire selection and operator
quality presented and agreed to during the course of the analyses are met- In the
opinion of the author, the projections made herein are accurately calculated based
i upon historical and surveyed information, the set of assumptions, and the
information, records and materials furnished to the author. The projections are not
intended to be and should not be understood to be any representation or warranty that
the projections will occur as set forth herein, and it is likely that the actual
performance described will differ from, exceed or be less than, the amounts
projected. Possession of this report or any portion thereof does not carry the right of
publication and no portion of this report may be disseminated to third persons
without the prior written consent of the author nor may it be used for any purpose by
anyone except for the client. The author's liability for breach of any obligation or
duty owed to the client for any element of this report is expressly limited to
repayment of the consultant's fee for that clement without any obligation or liability
for consequential,compensatory or incidental damages.
Airport Concession Program Development Report 06-15-06 Page 26