New SXM Airport Retail Strategy a “Win-Win-Win” for all Stakeholders

SIMPSON BAY, St. Maarten (January 20, 2013)—The new retail strategy at the Princess Juliana International Airport (SXM) is expected to be a “win-win-win” situation for all stakeholders, according to the findings of the InterVISTAS Consulting Group. The findings were presented to the airport concessionaires during the 3rd Quarter Facilitation Meeting held in August 2012.

In accordance with the recommendations of the study and following extensive consultations with the concessionaires, including another one held during the 4th Quarter Facilitation Meeting in November 2012, PJIAE announced the first of a two-phase tender process at the beginning of this month.

The first phase of an Expression of Interest (EOI) or a Request for Qualification (RFQ) began on January 8, 2013 and will close on January 24, 2013. The conditions to qualify for the next phase of Request for Proposal (RFP) include that the applicants should be in good standing regarding their financial obligations with PJIAE; that they should not be in litigation with PJIAE and have a minimum turn-over that varies according to the concession package. Qualified candidates will be announced on January 31, 2013.

The publication of packages for the second phase – the Request for Proposal phase (RFP) – will be made on February 5, 2013, with a pre-proposal meeting set for February 19, 2013. The deadline for the submission of the RFPs is March 26, 2013, while the selected candidates will be announced on April 4, 2013. The duration of the new concession agreements will be five years for retail and seven years for Food and Beverage businesses.

The bidding process is open to all interested businesses that can deliver the product categories, have adequate experience in the field, and proper financial resources to create and maintain a sustainable concession at the airport. Applicants can include the experience in airport operations of their parent or partner company, brand name or franchise.

There are 14 new exciting packages, including: Duty Free Operator, Sunglass Operator, two News, Books, and Magazines Operators, St. Maarten Souvenir Operator, Fashion Operator, Jewelry/Watches Operator, Wine and Cheese Concession, and two Coffee/Sandwich Bars.

Others are: St. Maarten/ Caribbean Food Concession, three Fast Food/ Hamburger, Italian/ Sandwiches, two Full Service Restaurants, Café de Paris, Drugstore, Telecom Store, Convenience Store, and Italian (Pizza).

All these are concepts that have been proven to be successful at airports all over the world and that generate the most revenues.

At present, there is a total of some US$20 million in outstanding debt – accumulated up to about 2010 by some of the current partners – which PJIAE is currently trying to turn around.

The InterVISTAS study indicated, in this regard, that there is room for improvement in terms of the performance of concessionaires, while it also highlighted the fact that there is significant unused space in the airside Food and Beverage and Retail area.

The study similarly found that there was passenger confusion made evident by the fact that each of the three Liquor and Tobacco outlets that currently exist at the airport, offer the same identical products at three different prices.

The new retail strategy therefore aims at increasing sales volume for the concessionaires. This will result in a win-win-win situation because when passengers find what they want and spend, the concessionaire’s sales will increase. This, in turn, will result in higher concession revenues for the airport. In this “triple win” scenario all of the stakeholders benefit.

Other objectives of the new retail strategy include:

· Creating a tempting airside lounge reflective of a St. Maarten sense of place (i.e. by effective use of culture, music, flavors)

· Improving the Food & Beverage and Retail space, particularly in its mix and lay-out.

· Ensure less passenger confusion regarding product offering and pricing.

· Upgrade airside Food & Beverage and Retail area with existing and/or new concessionaires.

In 2012, managing director of PJIAE, Regina LaBega had informed the concessionaires, especially those who had concerns about their future at the airport, that the consultations gave them a “heads up” on the plans and advised them that they could start making preparations right away.

LaBega had indicated then that, “having more money does not guarantee you a spot in the new F&B and Retail area. Everyone will have to go through the RFP process.”

She further added that, “it is the objective of PJIAE to increase traffic and these proposed changes go hand in hand with the expectation of an increase in arrivals.” The InterVISTAS study had forecast that “passenger traffic, using the main terminal building, but not including FBO traffic” would reach between approximately 1.8 million and 2 million by 2020. More than 1.6 million passengers passed through the airport in 2012.

Indeed, the plans had been warmly welcomed by several concessionaires who said with sales down and the economy in a slump, “it is highly appreciated that PJIA recognizes the need and is willing to take on the necessary steps towards improvements that would result in a win-win-win situation for all.”

Construction and remodeling is expected to begin in April and end in September 2013 while the new airside lounge and landside facility is scheduled to be opened on October 1, 2013.

OES