The blue-padded seats at the gates of the Bill & Hillary Clinton National Airport are the ones that were there when the airport opened in 1972 and Bill and Hillary were still in law school.
Other throwbacks include the concourse’s worn carpet, which pictures the former airport logo, a jet with contrails.
But that’s all about to change.
In October, the airport announced a $20.6 million concourse renovation project, and new gate seating and carpet are just the start. As that project is under construction, the airport also is shaking up its restaurant and retail offerings. The airport is adding two national restaurant chains, Chick-fil-A and Chili’s, and retail locations as part of a renovation package worth $4.7 million. All the renovations are expected to be completed about a year from now.
The renovations come at a time when other airports are starting to look more like shopping malls.
“Today we are seeing airports continue to expand, adopting the trend of infusing more shopping and upscale dining into the terminals and balancing that effort with continuing to offer traveler favorites,” said Sean Matthews, a spokesman for HMSHost of Bethesda, Maryland, which operates the food and beverage locations at the Little Rock airport.
“Larger airports have been spearheading this activity for a few years now, and smaller airports are beginning to follow suit as an operating model with more focus on non-aeronautical revenue is becoming an increasingly important factor for airport success.”
The airport’s commission revenues on food, beverage and retail sales increased 2.9 percent in 2016 to $993,246. The airport’s total revenue was $32.76 million in 2016, up 2.1 percent from the previous year.
Customers Change
Around 2009, the airport commission had a choice: It could either open a Chili’s or the full-service restaurant called Ouachita Landing, said Ron Mathieu, executive director of the Little Rock airport.
The commission wanted to go with an Arkansas theme down the 60,000-SF concourse, he said.
It approved opening Ouachita Landing near Gate 6 toward the back of the concourse.
“I think that was the right decision at the time,” Mathieu said. “But as time goes on, … we have different customers now than we did back then.”
He said the customer satisfaction scores have since shown that travelers want different eating options. “We really try and look at that [survey] and say, ‘OK, time for something to change,’” Mathieu said.
Yarnell’s Premium Ice Cream closed its airport outlet in 2011, and Whole Hog Cafe opened in the airport’s food court in April 2012, replacing the Pizza Hut that had closed. And even more changes were on the way.
Concourse Renovation
The $20.6 million renovation project that the airport announced in October includes overhauling the waiting area at the airport’s 12 gates. Airport spokesman Shane Carter said last week that the airport is about halfway through the concourse renovation.
“One to two gates at a time are being closed off, and you’re seeing new finishes being rolled out,” he said. Once the gates are completed, the new chairs with ports for USB and AC plugs will be added — not something travelers were demanding back in 1972.
After that project started, the airport found itself “in a perfect situation” to work on its retail and food offerings, Mathieu said. The contracts with the operators of the food and beverage company, HMSHost, and the retailers, Hudson Group of East Rutherford, New Jersey, were set to expire at the end of 2017.
“So now we have a motivated concessionaire that wants to convince us that it’s better to negotiate with them and extend their agreement” rather than seeking out another operator, Mathieu said.
The negotiations resulted in a contract extension that will run through 2028. It also calls for HMSHost to spend $3 million renovating the restaurants and the Hudson Group to spend $1.2 million on the retail locations; the airport will put in $500,000 toward the project.
The architect for the project is Alliance of Minneapolis. The contractor is Flynco Inc. of Little Rock.
The airport wanted to remain with HMSHost because it has the exclusive rights to Starbucks, which has been popular with travelers, said Bryan Malinowski, deputy executive director at the airport. “Think about what would happen … if we were to announce that we would no longer have Starbucks at the airport,” he said.
HMSHost operates in 44 of the busiest 50 airports in North America, according to the company.
The two national restaurant brands that the Little Rock airport wanted to land were Chick-fil-A and Chili’s, which they thought would satisfy passengers and boost sales.
Travelers tend to eat at the restaurants that they know, said Matthews, of HMSHost. “These restaurants provide a sense of comfort and convenience that is important to travelers,” he said in an email to Arkansas Business. “They also have the unique ability to provide desirable meal choices to a broad audience in airports where limited concession space is available.”
Mathieu said he’d noticed the trend in Little Rock too. So going after Chick-fil-A was a “no-brainer,” he said. The fast-food restaurant is closed on Sundays, and that tradition will continue at the Little Rock airport location. Despite operating only six days a week, a Chick-fil-A had the highest gross receipts in Little Rock in 2014, the last full year that restaurant receipts in Arkansas were available to the public.
Chili’s was also on the airport wish list. When passengers saw Ouachita Landing, Mathieu said, they didn’t know what to expect, although its menu includes items similar to Chili’s — like buffalo wings and chicken strips.
During the negotiations to secure the restaurants, the airport agreed to an 8 percent commission on the gross revenue of both Chili’s and Chick-fil-A. Most of the other restaurants at the airport pay 12 percent to the airport. The airport, however, is guaranteed to receive at least $597,000 in rent from HMSHost.
(Yes, restaurant chains charge more at their locations inside airports than they do elsewhere. While most mark up their menu items by 10 percent, Chili’s prices will be 12.5 percent higher inside the airport, according to the terms of the contract provided by the airport.)
Malinowski, the deputy executive director, said the airport was more concerned with the brands than the commission, which is why it took the lower percentage from Chili’s and Chick-fil-A.
“It’s important for us to get the concepts that we believe the passengers want — the Starbucks, the Chili’s, the Chick-fil-A, the Burger King,” he said. “The revenue is secondary to that.” And, Malinowski said, he thinks Chick-fil-A and Chili’s will generate higher sales that will offset the lower percentage that the restaurants pay.
Gross revenue sales for food and beverages were up 5 percent in 2016 to $5.9 million, according to figures provided by the airport.
To make room for the Chili’s and Chick-fil-A, however, other restaurants had to leave.
Ouachita Landing will close and its space next to Gate 6 will be renovated and slightly expanded for Chili’s.
After the food court is renovated, Chick-fil-A will move in, next to the Burger King.
The Quiznos now there will close. And the Whole Hog will close its location next to Burger King, but diners can still eat Whole Hog menu items if they go to the River Bend Grill, which is located before the area where customers go through the Transportation Security Administration’s screening.
The renovations to the restaurants will be done one at a time. Construction on the restaurants is expected to start in the middle of this year.
Retail Revenue Slips
Unlike food and beverage sales, retail revenue inside the airport has been slipping. In 2016, gross retail sales had fallen 8 percent from the previous year to $2.04 million. During that period, however, the total number of passengers at the airport rose very slight to to 1.99 million.
The sales numbers “tell you that the customers aren’t necessarily tuned into what it is that you have,” Mathieu said. “And it’s time to do a refresh of some new and different concepts.”
About 65 to 70 percent of Little Rock airport customers are leisure travelers, Malinowski said. And most are intent on getting through security and finding their gate.
The main retail location after a passenger exits security is near the end of the concourse, across from Gate 6. “But a lot of times people don’t want to go too far from that gate because they just don’t want to miss that flight,” Malinowski said. “So if your retail is not close by, you’ll miss that sale.”
The airport will use about 800 SF just inside the security checkpoint for new retail space, an area now available for passengers to charge electronic devices or work on laptop computers.
In addition, a retail kiosk will be added between Gates 4 and 6. Shelving will be added along the wall of the concourse, so as passengers walk past, they will be able to grab items and pay for them without having to enter a store.
A smaller retail location, River Bend Book Store at Gate 4, will close as part of the renovation.
The airport will continue to focus on departing customers because that’s where the money is. The passengers who arrive at the Little Rock airport will most likely use the restroom and then leave without making a purchase, Mathieu said.
“They’ll walk right out the concourse,” he said. “It doesn’t matter what you’ve got lined up.”