LOS ANGELES WORLD AIRPORTS TO RECEIVE MINIMUM $331.1 MILLION WITH WESTFIELD CONCESSIONS MANAGEMENT AGREEMENT FOR FOOD-BEVERAGE, RETAIL SERVICES AT LOS ANGELES INTERNATIONAL AIRPORT
New 17-Year Contract Covers Concessions in International Terminals and Theme Building
(Los Angeles, California – January 23, 2012) Los Angeles Board of Airport Commissioners today approved a 17-year Terminal Commercial Manager Concessions Agreement with Westfield Concession Management, LLC, (Westfield) to develop, lease and manage food-and-beverage, retail, specialty retail and certain other passenger services at Los Angeles International Airport (LAX). The forecast minimum revenue to Los Angeles World Airports (LAWA) is $331.1 million over the full term, which is comprised of a two-year development period and a 15-year operational period. Westfield and its concessionaires will be required to invest no less than $81.9 million in initial improvements and $16.4 million in mid-term refurbishment improvements to four facilities: the existing Tom Bradley International Terminal (TBIT), New TBIT currently under construction, Terminal 2 (LAX’s second busiest international terminal), and the airport’s iconic Theme Building. The agreement covers a minimum of 84,261 square feet of concession area.
“Los Angeles World Airports is undertaking a $4.11-billion modernization program at LAX to improve customer service, safety and security at one of the most significant international gateways in the world,” said LAWA Executive Director Gina Marie Lindsey. “A major focus of our customer service improvements is to create a cohesive, memorable and high-quality dining and shopping experience with a variety of new and innovative options that offer a ‘sense of place’ reflecting the Los Angeles region. Our selection of Westfield Concessions Management will allow us to meet the demands of today’s travelers for quality dining, shopping and other services in a timely, cost-effective manner.”
“Westfield is very proud to be selected to partner with Los Angeles World Airports in the transformation of Los Angeles International Airport,” said Peter Lowy, Westfield Group chief executive officer. “We are fully committed to bringing our global resources and development expertise to deliver an iconic, world-class airport experience.”
As Terminal Commercial Manager for the two international terminals and Theme Building, Westfield will select concessionaires subject to LAWA approval; design, develop and oversee construction of concession and related spaces; market and promote the concessions; negotiate and administer contracts with each concessionaire; and monitor and manage performance (including quality control over products and service levels, financial performance, and ensuring concessions are operational anytime passengers are in the terminals). To enable clear separation between managing and operating, as well as eliminate any conflicts of interest and, thereby, ensure consistent quality, customer service and performance monitoring, Westfield is not allowed to operate any of the concessions.
The agreement calls for Westfield to place a high priority on developing areas critical to the opening of the Great Hall/Core and West Gates phases of the New Tom Bradley International Terminal (total 1.3 million square feet) scheduled in spring 2013.
This is the first time LAWA has adopted a Terminal Commercial Manager business model and Westfield Concessions Management, LLC, was selected from among three proposers following the release of a Request for Proposals in May 2011.
Proposals were evaluated by a panel of four LAWA executives and one outside member on criteria that included: concession development experience/capabilities; design and construction experience/capabilities; management team dedicated to LAX; conceptual plan for LAX terminal improvements; financial capacity and commitment; process for concessionaire selection and approval; managing initiatives defined under the Federal Aviation Administration’s Airport Concessions Disadvantaged Business Enterprise (ACDBE) Program; managing concessionaire performance and operations; and financial proposal.
Westfield currently has operations similar to LAWA’s Terminal Commercial Manager model at nine other U.S. airports, including New York/John F. Kennedy International, Boston/Logan International, Ronald Reagan/Washington National, Washington/Dulles International, and George Bush Intercontinental/Houston.
On a related matter, the Board of Airport Commissioners also approved today a conditional, five-month professional services contract valued at $350,000 to Westfield to develop a conceptual design for concessions critical to the opening of the New Tom Bradley International Terminal areas. This action allows Westfield to begin working immediately on conceptual designs to submit to LAWA and various permitting agencies for review and approval, while their Board-approved contract is under consideration by the Los Angeles City Council. Under this contract, LAWA will only reimburse Westfield for design services if their contract is not approved by the city council, and LAWA will own all documents, designs and applicable work products.
About Westfield Concession Management, LLC
Westfield Concession Management, LLC, is the airport retail division of the Westfield Group, with more than 16 years of airport concessions development and management experience at major U.S. airports. The Westfield Group (ASX: WDC) is an internally managed, vertically integrated, shopping center group undertaking ownership, development, design, construction, funds/asset management, property management, leasing and marketing activities and employing approximately 4,000 staff worldwide. The Group has investment interests in 122 shopping centers in Australia, the United States, the United Kingdom, New Zealand and Brazil, with a total value of assets under management in excess of $59 billion. In the U.S., the Group has a portfolio of 55 shopping centers that are home to more than 9,000 specialty stores and comprise approximately 63 million square feet of leasable space across the U.S. In the Los Angeles area, the Group owns and operates nine premier shopping destinations including Westfield Century City, Culver City and Topanga.
About Los Angeles International Airport (LAX)
LAX is the sixth busiest airport in the world and third in the United States, offering more than 600 daily flights to 91 domestic cities and more than 1,000 weekly nonstop flights to 56 cities in 32 countries on nearly 75 air carriers. It ranks 13th in the world in air cargo tonnage processed. In 2010 (the latest full-year statistics available), LAX served more than 59 million passengers processed over 1.9 million tons of air cargo valued at nearly $80 billion, and handled 575,835 aircraft operations (landings and takeoffs). LAX is part of a system of three Southern California airports – along with LA/Ontario International and Van Nuys general aviation – that are owned and operated by Los Angeles World Airports, a proprietary department of the City of Los Angeles that receives no funding from the City’s general fund.
