Rethinking the Process

MIAMI -- As officials here battle with a terminal construction project that is spiraling out of control in terms of cost and missed deadlines within its $4.8 billion redevelopment, the retail and food and beverage offerings at the airport are undergoing a transformation of their own. Dr. Patricia A. Ryan, manager aviation properties (interim) and commercial operations for the Miami-Dade Department of Aviation, leads her team not only in redesigning the face of concessions here by more than doubling offerings, but in redefining the process that prospective tenants engage in to do business at Miami International.

Ryan, whose doctorate is in marketing and education, has been with the Miami-Dade Department of Aviation for two years. Previously, she led the redevelopment of the Reno/Tahoe International Airport's retail program.

[The Department of Aviation announced in late May the appointment of José Abreu, currently the state's secretary of transportation, as Miami-Dade's aviation director. He will assume the post in early July.]

The Miami-Dade Aviation Department previously had management contracts for its parking, management of the hotel, and for concessions. "The airport was not open to concessionaires," Ryan says.

Under the management agreements, the Miami-Dade Aviation Department did receive a higher percentage of the concessions revenue. However, both Ryan and Ray Diaz, project manager for commercial operations, say the new retail and food and beverage offerings are expected to make up the shortfall in increased business. The concessions program, excluding properties and general aviation, accounts for 48 percent of the airport's revenue.

Making MIA More Accessible

At Miami, Ryan says one of the main goals of the airport is to make the entire request for proposal (RFP) process easier for concessionaires while improving offerings to travelers through the airport. "We hope to offer more opportunities for concessionaires to be involved in Miami, more choices for the passenger through diversified offerings, quality retail, and brands that promote comfort and familiarity," she says.

One of the ways MIA facilitated this is by holding a workshop on how to do business with the airport and a workshop targeted at small businesses. The sessions covered topics such as finance, insurance, and disadvantaged business enterprises, while also outlining and clarifying "what we want and what we'll do with the information," says Ryan.

The information that the airport provides to prospective tenants is more detailed than it had been previously, says Ryan. "We now provide traffic information, passenger forecasts, and general information about airport traffic. It's all part of being more in tune with our business partners and therefore volunteering the information they need before they ask."

A Miami-Dade county code called the "Cone of Silence Provisions" restricts Ryan and some of her team from discussing the RFP or RFQ (request for qualifications) outside of "matters of process or procedure already contained in the solicitation document." During a public hearing held in mid-May, the cone of silence was lifted to allow interested parties to have questions answered by Ryan and Diaz. Unlike other airports, Ryan says she does not require that those responding to the RFP attend each pre-bid meeting, another aspect she says makes MIA more accessible to retailers.

Diaz adds that the airport anticipates its efforts will encourage more dialog between tenants and the airport.

Doubling Concessions Offerings

Under the $4.8 billion capital development program with which the airport is currently involved, the retail and food and beverage space will more than double from 100 to 250 locations in the next two years. "We're moving from a large program to an even larger one," says Ryan.

Between 2004 and 2008, 47 new food/beverage concepts, seven duty-free shops, 68 specialty retail stores, four news/gift shops, and 22 newstands will be added to the airport concessions program.

The new concessions program will operate similarly to a retail mall, says Ryan, and will include a mix of nationally and internationally known retailers, as well as retailers that represent the South Florida region. Airport officials expect traffic numbers to increase from 31 million annual passengers in 2004 to 25 million by 2015.

In mid-May there were five active RFPs. A new concept for those familiar with doing business with MIA, many of the locations were bundled into one RFP with a main tenant and subtenants. Diaz and Ryan say this approach will allow for more diversification in the concession offerings at the airport.

The new concessions design is reflective of passenger demands, says Diaz. "The savvy traveler has demanded that airports offer more options and more brands." A charge of the airport then is to balance the needs of travelers, appropriate price points, speed of service, level of ambiance, and quality of service, he adds.

Part of that is bringing in more brand-name merchandise, says Diaz. "People want value perception; you know what to expect with a brand." He says that the airport expects retail sales to increase due to the availability of brand-name products.

The new layout of concessions will be more balanced, says Ryan, offering travelers more choices and encouraging competition between retailers. "When's there's competition, employees are inspired to do better," she says.

Each of the terminals at MIA will have different concession design guidelines, says Ryan. For example, "The North Terminal has a whole different design guideline just for that terminal," she says. "It will feature vaulted ceilings, and there will be an openness to it, so the concessions design should follow that theme." The South Terminal will have what Ryan calls a "shopping mall feel" with a double-loaded entryway and the tile for the concessions floor will feature a palm tree design.

New RFP Aspects

Tenants will be responsible for building out the leased space, with a minimum requirement of $250 per square foot. Ryan says there is a MAG (minimum annual guarantee) built into each lease, but tenants will not be required to pay it for the first year. "That's part of us trying to make the process easier," says Ryan. "We're trying to be very careful on how we set the MAG — we want our tenants to be successful."

Additionally, one half of 1 percent of gross revenue from each tenant will be contributed to a concessions marketing fund to promote the retail and food and beverage offerings throughout the airport.

Not only are prospective tenants learning more in this revised process, Ryan says she and her staff are learning more after each issuance of an RFP. "After you do the first, you try to make each a little better, with the wording, being more clear. Changing our ideas about the MAG is just one of the changes we made. We learn from each RFP." She expects the learning will continue as there are three more RFPs that will be issued by the end of the year. "We may be doing some brand new things by then," says Ryan. "There may be things out there that we just haven't had time to think about before that we'll include with future RFPs."