Travel Markets Insider / October 2003
By Larry Luxner
Chicago-based Unison-Maximus Consulting says its non-traditional approach to retail concession planning has helped make it a leader in the cut-throat industry of airport retail management.
At present, Unison oversees all retail operations at Chicago O'Hare, with 31.3 million passengers and $166 million in 2002 sales; Chicago Midway (8.1 million passengers and $46.9 million in sales) and Newark Liberty, Terminals A and B (6.5 million passengers and $58 million in sales). The company is now completing the first year of its five-year contract at Newark, and is in the first option year at both O'Hare and Midway.
In addition, it does consulting for several mid-sized airports in the United States and Canada, including Toronto, Salt Lake City, Memphis and New Orleans. Past clients include Miami (for which it developed a retail master plan in the mid-1990s), Edmonton and Detroit Midfield.
Judy Byrd, senior vice-president at Unison, is in charge of the company's retail planning and development division.
"One of our strengths is that coming from a planning background, we've had to be involved very closely in the economics of the deal, making sure these deals represent win-win situations for the tenants, the airports and the airlines," Byrd told Travel Markets Insider. "One of the things airports find attractive about us is that we're not there just to drive up the minimum guarantees so that we can derive a higher fee. The feedback we have gotten from airports and tenants is that we are a lot more reasonable in terms of fee structure."
Byrd, noting that struggling customers frequently complain that airport fees are too high, said "we understand better than others the cost side of the business, namely the costs associated with doing business in an airport versus a mall environment."
The company was founded in 1989 as Unison Consulting Group by Byrd and two other partners, Anthony Q. Drake and Sharron Gist Gilliam. Ten years later, the group — which specializes in aviation retail, aviation finance and public-sector consulting — was bought out by Maximus Inc., a huge Virginia-based conglomerate with 2002 revenues of $500 million and more than 5,500 employees in 300 offices worldwide.
"Our experience as consultants have given us a real advantage, because we understand the dynamics of retailing in airports," Byrd said in a phone interview from Chicago. "We know the challenges of retailing — in many cases in that specific environment. We have a background in everything from knowledge of traffic flow patterns and infrastructure to 'back of the house' stuff like getting inventory in and out, and all the myriad issues related to security. Many times, we've already studied the passengers themselves."
Unison claims that "with more than 100 million customers, we serve more U.S. passengers than any other airport developer. That translates into significantly higher sales than our competitors, with more than $270 million in annual sales at Unison-managed programs."
The company also says its overall revenues exceed the airport retail operations of rivals BAA USA and Westfield Concession Management, though that claim can't be verified because none of the three give out specific revenue figures for their U.S. airport retail subsidiaries.
In a company fact sheet, Unison says its focus on the "guest experience" has provided its airport clients "with programs incorporating national and international retailers, fresh foods with creative presentations, creative design themes and comforting amenities. Sophisticated signage, high-impact graphics and innovative retail presentations position our clients to have the most dynamic and productive retail programs in the world."
To date, Unison has serviced more than 75 airport clients (40 retail, 35 finance), and at least 20 airports have worked with the company's retail and finance practices.
"We have numerous ways to assist airports," said Karen Mirante, director of special projects for Unison's airport retail division. "In some cases, airports don't really need developers because their program is too small, they have sufficient staff or they don't have funding issues. In these cases, such airports don't want a developer but they do want expertise. That's what we do."
Unfortunately, that wasn't the case at Miami International Airport, where Unison last month lost the opportunity to develop 40,000 square feet of prime retail space after having been chosen by the Miami-Dade Aviation Department. The switch came about when one of its competitors, Westfield, objected to the selection of Unison — charging that the Chicago-based company didn't meet the requirements stipulated in the original RFP, which specifically called for a developer, not a manager.
"Miami was a bit of a circus," conceded Byrd. "They selected BAA first, but then we said they had calculated the scores wrongly. When they recalculated, we were first, Westfield was in second place and BAA was third. Westfield couldn't win on this basis, so they called the committee back in after the financial bids were opened and got them to rewrite the RFP entirely, which disqualified us completely."
Byrd added that "we were the only firm that committed money" — $1.5 million, to be exact. "We showed them how we expected the money to be paid back. The other companies were vague."
Another opportunity may open up at Houston's George Bush Intercontinental Airport. A 1995 contract by HMSHost, formerly known as Host Marriott Services, has expired, and the Houston Airport System — which recently hired Unison to consult on the bidding process — plans to nearly double the airport's existing 20,000 square feet of retail space in order to keep up with annual growth of 11% during the past six years.
Despite a severe downturn in business following the Sept. 11 terrorist attacks, Mirante says specialty airport retail sales across the country have started to edge back up.
"Where we were hit most heavily was in duty-free. All U.S. airport duty-free operators are still struggling," she said, adding that since 9/11, she's seen a big push to locate retail shops after security rather than before.
"Passengers' anxiety is such that they want to get through security quickly, and once they get through security and locate their gate, they have time to shop and dine. We try to put as much space as we can airside rather than landside so retailers have the most exposure possible. With security being even more rigorous than before, we see how important it is to have proper location."
Added Byrd: "People are arriving significantly earlier than their flights, but a lot of that time has been spent waiting in line. We might also want to give up some retail space for security operations that need it. Sometimes the demand for new machines and personnel has a big impact on concession space, though this varies from airport to airport."
Although Unison's primary business is in the United States and Canada, Mirante said her company is interested in other potential markets, especially the Caribbean.
"As we find out about opportunities, we'll pursue them," she told us. "It all depends on how the deals are structured."