Airport Biz Centers Brewing

The story behind the story is Gilbert Aranza, owner of Star Concessions Ltd. of Dallas, who holds coffee rights to the facility as part of a portfolio that he's amassed since 1988 when he decided to duke it out with HMS Host over concession space in DFW International Airport. Since then, Aranza has unseated HMS Host Corp. from full control of DFW airport concessions and gained six Seattle's Best Coffee shops to his competitor's two Starbucks as just part of the portfolio assault. Aranza's package today includes 26 units in three terminals, one shop in the international portal that's going to open next year and a pair of service stations at the north and south ends of the DFW airport property. Plus, he owns all of the food and beverage units--10 restaurants and three Seattle's Best--at Dallas' Love Field along with operating agreements for American Airlines' Admirals Clubs and United Airlines' Red Carpet Clubs in Chicago, St. Louis, Austin, Los Angeles, San Diego, Orange County and Dallas/Fort Worth.

"I got upset with Host and made it my mission to displace them," says Aranza, an attorney who was representing minority vendors in 1988 when he tossed down the gauntlet to the Bethesda, MD-based airport concession behemoth, which now has facilities in more than 70 airports worldwide and 100 travel plazas in the US and Canada. Through licensing and franchising pacts, HMS Host wrapped branded concessions like Starbucks, Burger King and Quizno's into its airport portfolio.

Even Starbucks Corp.'s acquisition of Seattle Coffee Co. couldn't settle the squabble between the two adversaries. But, Aranza tells GSR that he decided it was time to bury the hatchet so the airport board could proceed with its idea to open business centers in the public space. "We decided this business with Starbucks made more sense than continuing the battle," says Aranza, who scored a final coup as the operator for the business centers, breaking new ground for the airport and Starbucks too.

Aranza says he struck a joint venture partnership with HMS Host, Starbucks' exclusive airport operator, for a 49.9% stake and the operating partner's throne. The DFW business centers will create 75 new jobs.

Aranza says the 1,200-sf centers--a 50/50 split of space with Starbucks--will cost a total of about $4 million to set up. Terminals A, B, C and E will each have two centers positioned at the Skylink stations. The finish-out package calls for leather lounge seating, counters for working or eating, semi-private workstations, electrical and phone outlets at each seat, Wi-Fi service in all the space, dial-up Internet access, close-caption TV with news and sports programming and open doorways to Starbucks coffee shops.

"We think these are the first in the country," Pat Gleason, vice president of DFW airport concessions, says. The first hurdle, though, was convincing the airlines that the centers weren't going to compete with their paid clubs. "We are providing an amenity for all passengers," he stresses. The airport, with a middle of the US positioning, is one of the top spots on corporate travel itineraries, whether it's a layover or business visit. To make the facility more business friendly, the facility was outfitted with Wi-Fi in recent years.

"This is just the next step," Gleason says. Under the contract, the airport coffer will pick up revenue from the Starbucks concession. The team's also mulling over whether to install services like printers and copy machines in a dual-pronged strategy for business convenience and added revenue gain. The centers are expected to generate $15 million to $18 million in business in "two to three years," Gleason says. And, more centers could be added if the first wave is a hit with travelers.

With the Aranza-HMS Host dispute settled, the JV won the deal under a sole-source procurement process that didn't require bidding. But, Aranza had another battle of sorts on his hands once the idea took root: explaining to the airlines. "I told them I was just selected as the operator...and it shouldn't conflict with their clubs," says the operator of a trio of 6,000-sf premium clubs in three DFW terminals.

Meanwhile, the airport's expanded plan is a good fit for Starbucks, which has more than 8,500 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim...and a fast-track plan to add 1,500 new stores in fiscal year 2005. Starbucks' team projects the long-term potential is 30,000 stores worldwide in a 50-50 split between US and international markets.