AIRMALL Completes Concessions Facelift at Cleveland Hopkins

Nicole Nelson
Published in: 

Amid an economy with extremely tight credit and significantly declining passenger levels, Cleveland Hopkins International Airport has transformed its concessions program. Previously dismal spend rates are projected to reach a healthy $7.50 per enplanement by year-end.

Prior to partnering with AIRMALL USA (formerly known as BAA USA) in 2008, the airport's 20-year-old retail and food/beverage program was growing very stale, says Ricky Smith, director of the Cleveland Airport System.

Facts & Figures

Project: Concessions Overhaul

Airport: Cleveland Hopkins International Airport

Airport Operator: Cleveland Airport System

Master Developer: AIRMALL USA

Contract Awarded: April 2008

Contract Duration: 10 years

AIRMALL Investment: $8.4 million

"The program was antiquated," Smith explains. "The food and beverage concepts were in the wrong place in the terminal, and we did not have a large variety in the way of specialty retail," he says, noting a lack of significant participation from local operators. "On top of all of that, the per passenger spend was at the bottom of the industry."

Cleveland Airport System set out to correct all of those inadequacies by partnering with a developer. Under the leadership of AIRMALL, it executed a plan to dramatically expand the commercial program at Hopkins and, more importantly, reconfigure its concessions spaces. Now two years into a 10-year master developer contract with AIRMALL, the airport has nearly twice as many concessions operators, and commercial space has increased from 37,000 square feet to almost 60,000 square feet. To date, AIRMALL has invested $8.4 million in the makeover.

Shuffling the Deck

AIRMALL relocated and expanded the food/beverage program, Smith reports. "We now have a food court where the retail court used to be," he explains, noting that the new food court is in an area called "the Banjo" that accommodates a significant amount of the airport's traffic. Concourse B, another area with high traffic, also received more food/beverage options.

Smith says the airport is excited to house a number of new local brands with local ownership, such as Panini's Bar & Grill. Quaker Steak & Lube and Great Lakes Brewing Co. are other new offerings indigenous to the region.

National brands are equally vital to the mix, notes AIRMALL USA president Mark Knight. "When people are short on time in an impulsive environment, they are not there to shop as a primary purpose," Knight explains. "If you show them a Villa Pizza or a Dunkin' Donuts, they know what to expect, and it reduces the buying apprehension."

AIRMALL also likes to combine local talent, companies and concepts with national franchises, "so they can compete and have a good chance at success," Knight says.

While AIRMALL re-concepted many of the retail and food/beverage spaces at Cleveland Hopkins, there were some holdovers from the previous regime. Johnston and Murphy, a national brand footwear and accessories merchandiser, already had a presence in the airport; AIRMALL simply built it a new inline store. AIRMALL also retained the Rock and Roll Hall of Fame and Museum Store, under the premise that the airport program wouldn't be complete without the Cleveland landmark.

"We have a smattering of national brands along with some of the great brands from the region that give a flair and uniqueness to the program," Knight says.

On the Way

AIRMALL has been busy developing key areas of the airport since being awarded the contract in April 2008, reports Knight, and is nearing substantial completion of the first phase of development.

"We pride ourselves on the fact that our developments really are never done, as they are very dynamic and are works in progress," he explains.

Knight says AIRMALL is currently holding back a couple units because passenger numbers are down, but when all is said and done, there will be 76,000 square feet of commercial space.

He cites the Continental regional jet area in Concourse D as a previously underserved area that has already benefited from additional offerings.

Despite a comprehensive concessions overhaul, The Rock and Roll Hall of Fame and Museum Store remains a fixture at Cleveland Hopkins.

"As you emerge up the big escalator into that area, there used to be spotty placement of a bar and a couple of fast food units here and there," Knight explains. "What we have done is actually created a whole sweeping development. So as you come up the escalator, you are facing a brand new block of retail space right in front of you anchored by two sit-down restaurants: Gordon Biersch Brewery and O'Brycki's."

Another key area of emphasis is the commercial space between the two main security checkpoints - a primary entry point historically occupied by specialty retail.

"The problem is that it was an area that many passengers didn't have to pass through," Knight says, noting that passengers could go through the Continental checkpoint, turn left and miss the specialty retail, or go through a different concourse altogether.

AIRMALL chose to replace the retail offerings with a five-unit food court - a destination that passengers are more likely to seek out, Knight explains. "We also opened up the exterior wall to allow passengers views through glass to the runway and tarmac," he notes. "So you can sit in a very nice environment and enjoy your airport experience."

Some of the changes, he says, have been "pretty dramatic."

Terms & Conditions

At Cleveland Hopkins, AIRMALL earns 30% of all rent and revenue generated by tenants for its role as developer; the airport retains 70%. According to Knight, the split is typical for a 10-year contract at a location where AIRMALL makes a significant investment in the facilities.

"This partnership has been profitable, but our business is entirely passenger based," Knight qualifies. "Certainly, we would like to see some additional passenger growth to catch up to the levels we are expecting, but we are very happy at this point in time, and we're looking forward to much better times ahead."

AIRMALL, he specifies, measures success in terms of sales per passenger. "We can't control the number of passengers, but we can certainly influence the sales out of each one," Knight says, noting that sales at Hopkins have increased nearly 35%, from $5.59 per passenger to a projected $7.50 by year-end.

"We are very optimistic and very encouraged about the commitment from Continental and United to hub in Cleveland for the next several years," he adds. "Still, we are in a period of flat to down passenger growth, which we need to manage very diligently."


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