Westfield Wins $331 Million LAX Concessions Contract

The following article was written by Richie Duchon of City News Service

The Los Angeles Board of Airport Commissioners, which oversees Los Angeles International Airport, voted unanimously on Monday to approve a 17-year, $331 million contract for management of restaurants and shopping at two airport terminals and the Theme Building.

The contract with Westfield Concession Management, a subsidiary of the
Australia-based real estate and mall developer Westfield Group, guarantees Los
Angeles World Airports a minimum of $17.7 million for the first year concessionaires begin operating at the airport.

"We are fully committed to bringing our global resources and development expertise to deliver an iconic, world-class airport experience,'' Westfield co-Chief Executive Officer Peter Lowy said.

Under the agreement, Westfield will develop, lease and manage stores and
restaurants at the Tom Bradley International Terminal, including the $1.5
billion Bradley West addition under construction, Terminal 2 and the Theme
Building.

The agreement allows Westfield a two-year period to develop spaces and
select concessionaires, with final approval going to the Board of Airport
Commissioners and the city attorney. During the remaining 15-year term of
management, Westfield will be charged with monitoring the restaurants, stores
and other vendors for quality, service and financial performance.

LAWA selected Westfield partially because it runs concessions under
similar terms at nine other airports in cities including Boston, New York,
Chicago, Houston and Washington, D.C.

Concessions at LAX have been a source of embarrassment for city
officials, who describe the airport as the city's first impression for
international business travelers and tourists.

"The mayor has directed the Board of Airport Commissioners to improve
the passenger experience at LAX, the gateway to the Pacific Rim, and the first
stop for so many visitors to L.A.,'' Villaraigosa Press Secretary Peter Sanders
said. "Today's decision is a positive step forward as we create a world-class
airport.''

The Airport Commission awarded concessions contracts for terminals 4, 7
and 8 last May. Host International will provide concessions in terminal 4, with
outlets including Camanile, Cole's, 8 oz. Burger Bar, L.A. Gourmet Street
Truck, La Provence Patisserie & Cafe, Real Food Daily and Starbucks.

CMS/Camacho Ventures, which manages eateries such as Seven Grand, BLD,
Loteria Grill, Mamalade Cafe, The Counter, Yogurtland and Coffee Bean & Tea
Leaf, will manage terminals 7 and 8.

The Westfield contract marks a break from the model of leasing directly
with the vending company. Westfield will manage its concessionaires more like a
mall.

Los Angeles World Airports Deputy General Manager for Commercial
Development Debbie Bowers told the commission the new model is likely to expand the pool of concessionaires "beyond the pool of usual suspects'' and out-
perform the other models.

Lowy told the commission the company's goal is to choose retailers that
are unique to Los Angeles.

"One of the major issues that we have in our business is that retailers
are becoming ubiquitous. Whatever retailers you find in Paris, you find in
Los Angeles. Whatever you find in New York, you find in London,'' Lowy said.
"I think that's the long-term challenge, not just the design ... but how can
we do this and have a local flavor for the concessions we put in place.''

The company and its concessionaires will have to invest at least $82
million for initial improvements and $16.4 million for mid-contract
renovations.

To avoid conflicts of interest, the agreement bars Westfield from
operating any of the units in the terminals or Theme Building.

LAWA can terminate the agreement after 10 years if the revenue stream
from the concessions are not meeting expectations.

Lowy told the commission the company would be somewhat restricted in how
it can develop the Theme Building because its official historic landmark
designation. Instead, he said Westfield would work on ways to attract more
visitors to the Theme Building, possibly allowing travelers a way to check in
for their flights from the building.

"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,'' LAWA
Executive Director Gina Marie Lindsey said. "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.