The roster of companies bidding on major concessions contracts in North American airports has undergone significant changes in recent years, and many predict more upheaval as companies jockey for position on a fluid playing field.
An influx of foreign interest, and in some cases foreign capital, is changing the makeup of some of the key players in the industry.
Nearly all of the largest concessionaires in the North American market are now owned by foreign entities, with the most recent transaction, French company Lagardère Travel Retail’s purchase of Paradies in a $530 million deal, concluded in October. That created a retail entity, with a smaller food and beverage component, to combat the other major player, Dufry-owned Hudson Group, in the competitive retail sector.
Dufry, in fact, has been on a North American acquisition spree over the past decade. The Switzerland-based travel retail company acquired U.S. duty-paid retailer Hudson Group in 2008. That move was followed by the acquisition of duty-free operator Nuance Group in 2014 and the purchase of World Duty Free Group in 2015. WDFG includes duty-paid retail operations divested by HMSHost Corp. in 2012.
Dufry’s retail dominance, in terms of overall size, is unparalleled in North America.
“We’re probably represented in every one of the major airports,” says Laura Samuels, vice president of corporate communications for Hudson Group.
“What we like about it is in North America, we get access to lots more airports than we had before when we were just Hudson. For instance, Nuance is very big in Toronto and we were not in Toronto. World Duty Free Group is big in several airports that we’re not in,” she adds, citing Detroit Metropolitan Wayne County (DTW) and Tampa International (TPA) as examples.
The recent formation of the new Paradies Lagardère ups that company’s competitive position against Dufry. In August, Lagardère Travel Retail agreed to acquire Paradies from Freeman Spogli & Co., the Paradies family and other shareholders. The purchase by the French company effectively merged the operations of Paradies and Lagardère’s LS Travel Retail North America.
Separately, developer Airmall USA was also a target, with Germany’s Fraport Group acquiring the firm in 2014.
Those transactions are the largest but certainly not the only acquisitions that have taken place within the U.S. concessions industry. Thus far, the consolidation has been mainly, but not exclusively, on the retail side, but many industry executives say they expect more to come.
“The foreign entities are going to look at the biggest operators first,” says Drake Beaton, senior manager at ICF International. “That’s where they, for a reasonable amount of money, can pick up a really good operator in the U.S. market, although the obvious ones have already been picked up.
The complete article appears in the December/January print issue of Airport Revenue News.Click Here to subscribe.
