At a time when the state's largest airport is enjoying an increase in passenger traffic, revenue from its food, beverage and retail operations hasn't recorded a corresponding bump.
In the first six months of 2018, slightly more than 1 million passengers have gone through Bill and Hillary Clinton National Airport, Adams Field, a 2.4 percent increase from the same period last year.
On the other hand, revenue from restaurant and retail concessions is flat through June compared with the corresponding period in 2017, falling to $480,963 in the first six months of 2018 compared with $489,652 a year ago.
Airport officials blame the flat revenue on ongoing construction intended to upgrade the airport's food, beverage and retail offerings, a nearly $4 million project that isn't expected to be completed until later this year.
The airport earned a little more than $1 million from restaurant and retail sales, a small part of its overall revenue of $33.7 million in 2017. The airport, although an agency of the the state's capital city, receives no general revenue from the city and must generate its own funds for maintenance and operations.
But the restaurant and retail side isn't something airport officials can ignore. Visitors to the airport spent nearly $8.2 million last year on food, drinks and merchandise.
Customer satisfaction surveys done for the airport have shown that passengers aren't as happy with the airport's restaurants and retail options as they are with other offerings, such free Wi-Fi, which is billed as the nation's fastest.
"We knew the customers were telling us something and that we had to look at what we had and refresh it overall," said Ron Mathieu, the executive director for Clinton National.
The improvements come as the airport embarks on a new 10-year extension with HMSHost. The current 10-year agreement expires Dec. 31.
Airport officials elected to renew the agreement with HMSHost to operate the retail side. Hudson Group acquired HMSHost's retail operations two years ago.
Each has a designated minority-owned business. Minority-owned business partners long have been part of the contracting process at the airport, which is governed by U.S. Department of Transportation rules that require minority-group participation "to remedy ongoing discrimination and the continuing effects of past discrimination in federally-assisted highway, transit, airport, and highway safety financial assistance transportation contracting markets nationwide."
JQ Enterprises Inc. of Laurinburg, N.C., is the minority-owned business partner for HMSHost, and Westwin Business LLC of New Orleans has the same relationship with Hudson Group.
The airport elected to stay with the same arrangement rather than seek new concessions partners because the discussions began at a time when passenger traffic was declining and HMSHost, a subsidiary of Autogril, which bills itself as the largest provider of food and beverages for travelers, had something no one else did: Starbucks.
The airport has two Starbucks locations, including one on the concourse and one in the main passenger terminal. HMSHost, a subsidiary of Autogrill, which says it is the world's largest provider of food and beverages for travelers, operates 120 airport Starbucks.
"If we brought someone else in, was this community ready to lose Starbucks?" Mathieu said. "The answer, really, was a resounding no."
But what has changed is the airport policy of providing a local flavor in its offerings that were exemplified by its Ouachita Landing restaurant. Unlike national chains, the HMSHost didn't have to pay a franchise fee for Ouachita Landing Bar and Grill.
In the past, the airport has experimented with other national chains, such as Carvel and Cinnabon, without success.
"There's constant evaluation that's going on," Mathieu said. "It is not in Host's interest to have stores down the concourse that are not performing. We now know how Ouachita performs. Now that we're bringing in a national brands, I'm really curious to see if we truly understand what our customers are telling us."
The airport is adding to its mix in the concourse a Chili's restaurant, which is under construction now in what was once the food court. Once it is opens this fall, Chick-fil-A will join Burger King at the food court, which will be where Ouachita Landing is now.
Whole Hog, a well-known local establishment and a popular offering at the airport, no longer will have a spot in the food court. But its most popular items now are prepared and sold at the River Bend Bar and Grill in the pre-security area of the terminal on the second floor.
Michael Price, vice president of business development for HMSHost, said the offerings are the right mix both for passengers and his company.
"In terms of customers -- travelers -- those are the brands that they seek, which is why we're working with the airport to bring them," Price said. "We plan to see increased revenues with these changes."
The same goes for the retail side, which has been taken over by Hudson Group. The North American subsidiary of Dufry AG, the international travel retailer based in Switzerland operates nearly 1,000 retail outlets in 88 airports and transportation terminals in the United States and Canada, including at 24 of the 25 busiest airports in North America.
The company knows what passengers want or need, has offerings no one else has and makes it easy for passengers to find them, said Shane Carter, the airport spokesman.
Where once only one retail outlet was available on the concourse, as of last week there were three Hudson News outlets, including one next to Gate 3.
"That is substantial for our passengers," Carter said. "The bulk of our passengers are now at Gates 1 through 4. So they have options at those gate areas where before the passengers walked all the way down the concourse to the rotunda area to find a retail outlet outside of the bookstore."
The retail outlet outside the concourse in the pre-security area is also undergoing a transition to a Hudson News outlet and will remain open, he said.
The Hudson News additions have impressed Mathieu.
"It's got that newness feel about it and people want to go by and see what they have," he said.
SundayMonday Business on 08/12/2018