Duty Free Americas Receives Recommendation for Miami Airport Deal

Duty Free Americas, a Hollywood firm with stores at 12 U.S. airports, and whose parent company owns French designer label Christian Lacroix, will likely be the next operator of Miami International Airport's tax-free stores.


Duty Free Americas, a Hollywood firm with stores at 12 U.S. airports, and whose parent company owns French designer label Christian Lacroix, will likely be the next operator of Miami International Airport's tax-free stores.

The company, owned by three brothers who grew up in Miami Beach and made their money in the perfume business, beat out three other contenders -- each with local political ties -- to win an airport evaluation committee's recommendation. MIA is now working on a contract for the 12 stores, to be presented to the Miami-Dade County Commission in September.

As an international gateway, MIA's duty-free business is among the most significant in North America, ranking fifth in gross revenue in 2004, according to Airport Revenue News, a monthly trade magazine published in Palm Beach Gardens. About seven million international passengers fly out of MIA each year.

''If there is one airport we wanted to do business in, it's Miami airport,'' said Simon Falic, 44, the oldest of the three brothers, and chairman of Duty Free Americas. ''We look forward to finalizing the contract as soon as possible and opening the stores as soon as possible.''

The duty-free shops will span MIA, from the North to the South terminal. Brightly lit, with an open layout and merchandise displays, the tax-free shops promise to be well-stocked, have longer hours and offer promotions to attract more customers and boost sales, said Joe Kearney, Duty Free Americas' vice president of business development.

The majority owner of the existing duty-free operator at MIA -- Starboard Cruise Services, which is owned by international luxury brand maker LVMH -- opted not to bid this time, citing financial reasons. Its contract for eight existing stores expires at the end of November.

Duty Free Americas, purchased and renamed by the Falic brothers in 2001, operates a total of 85 shops at airports, including New York's JFK, Chicago O'Hare, Washington Dulles and Boston Logan, and along the U.S. borders. Among its Latin America airport shops are those in Maracaibo, Venezuela; Panama City, Panama; and Medellin, Colombia.

''It was a combination of their technical expertise to do what they say they can do, the look of the design, and the experience factor of having worked in a variety of airports, that helped make this our recommendation for award,'' said Patricia Ryan, MIA's manager of commercial operations, and a member of the airport's evaluation committee.

The company also bid more money. Duty Free Americas Miami offered a minimum annual guarantee to the airport of $20 million -- topping the $18.5 million offered by Dufry Miami Retail Partnership and about $9 million more than two other contenders, Worldwide Duty Free Retailer, and Miami Duty Free.

The new concessionaire also must pay about $9 million in construction costs to build out the stores.

'A Little High'

''It's a little high,'' said Pauline Armbrust, publisher of Airport Revenue News, of the $20 million minimum annual guarantee. ''But obviously Miami is a great airport for duty free, and I'm sure they are planning to drive sales and meet those revenue targets.''

Falic said he did not overbid, and feels confident the company can make the payment and still earn a profit.

In fiscal 2004, by comparison, MIA earned $13.6 million from the current duty-free concessionaire, including $8.9 million in minimum annual guarantee, $3.3 million in rent and an additional $1.4 million, based on a percentage of revenue.

In an airport known for heavy lobbyist influence, Duty Free Americas hired two to support its proposal, Alan Becker of Becker Poliakoff, and Miguel Diaz de la Portilla, of Adorno & Yoss. Falic declined to say how much the company has paid them in fees.

Partners

Duty Free Americas is partnering with two minority firms on the Miami contract. Concourse Concessions, a Los Angeles company owned by an African-American woman, has operated two duty and tax-free stores at Los Angeles International Airport for 16 years, and two stores at Washington Dulles for nearly two years.

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