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“The new concessions program in Terminal 5 will reflect our City’s world-class shopping and dining experiences, featuring local, national and international brands“ |
Mayor Rahm Emanuel |
US. The Chicago City Council voted 45-3 on Thursday to confirm Westfield Concession Management LLC’s 20-year agreement to redevelop and manage Chicago O’Hare Terminal 5’s concession programme.
The agreement provides for a complete redevelopment of the commercial programme at the International T5. As a result, Dufry (replacing incumbent Duty Free Americas), Hudson Group and Ãreas are set to run the duty free, news & gifts and food & beverage operations respectively, The Moodie Report understands from reliable sources.
Westfield will replace Chicago Aviation Partners, a joint venture involving Duty Free Americas and McDonalds Corp.
The annual rent to be paid by Westfield will be either US$3.00 per international enplanement from T5 in the prior calendar year or a percentage rent of 16% of gross sales, whichever is greater. The US$3.00 per enplanement will be tied to the Consumer Price Index to account for inflation.
According to Crain’s Chicago Business, Chicago Aviation Partners mounted a last-minute bid to top the Westfield offer, offering a much higher minimum per passenger (US$6.81) and 18% of sales compared with the successful bidder’s 16%. The incumbent partnership also proposed putting up a US$10 million deposit to underpin its offer. Thursday’s vote appears to have thwarted the group’s ambitions though a further legal challenge remains a strong possibility, we understand.
The redevelopment of Terminal 5 provides for the relocation of the security checkpoints to open up prime concession space and the build out of several new concession spaces within the airside location (post security) of the terminal. In total there will be over 25 concession spaces.
Thursday’s vote followed approval of the agreement earlier in the month by the Chicago City Council Committee on Aviation.
In a statement the Chicago Department of Aviation said: “The agreement provides for a complete redevelopment of the concessions program in International Terminal 5 at O’Hare International Airport to add new food & beverage, news and gifts, specialty retail, and duty free locations.”
“This agreement will bring 280 new jobs to Chicago and improve the travel experience of Chicagoans and visitors from around the world who fly through O’Hare International Airport,” said Mayor Rahm Emanuel. “The new concessions program in Terminal 5 will reflect our City’s world-class shopping and dining experiences, featuring local, national and international brands.”
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How the Chicago Tribune reported the Westfield agreement |
Westfield was the successful respondent, unanimously selected by a 20-member evaluation committee, after what the department called a “thorough and transparent” 16-month request for proposal process.
The agreement provides for Westfield to redevelop and manage concessions at T5. It does not privatise the terminal itself. The City retains ownership of the asset and has the opportunity, at the ten-year anniversary of the agreement, to terminate the agreement without cause.
Westfield and its operators will invest approximately US$26 million to redevelop the terminal’s concession programme. This will include the creation of 280 new jobs.
“We welcome Westfield Management to O’Hare to provide new offerings to travellers at International Terminal 5,” said Chicago Department of Aviation Commissioner Rosemarie Andolino. “Westfield’s redevelopment plans for the International Terminal will reflect Mayor Rahm Emanuel’s vision to bring world class amenities to a world class city.”
We’ll bring you reaction from the various parties soon.
BACKGROUND ON WESTFIELD AND CHICAGO O’HARE
Westfield Concessions Management LLC is 100% owned by Westfield Concession Management LLC (WLLC). In turn, WLLC is wholly owned by Westfield America Limited Partnership which is 100% owned by the Westfield Group.
The Westfield Group is one of the largest retail property groups in the world. Westfield is known for its portfolio of shopping centres including Chicago Ridge, Old Orchard, Skokie, Fox Valley, Aurora, Hawthorn, Vernon Hills and Louis, Joliet.
Westfield Concessions Management holds leases or management contracts at the following airports: Boston Logan, Orlando, Houston (George Bush), JFK, Miami, Newark Liberty, Ronald Regan National and Washington Dulles International Airports.
O’Hare’s International T5 was built in 1993. Currently 23 air carriers operate from the terminal’s 21 common-use gates. O’Hare consistently ranks as one of the world’s busiest airports, offering non-stop and direct service to nearly 200 cities worldwide.
Fifty-five commercial carriers operate out of 189 gates at O’Hare, carrying more than 67 million passengers annually. O’Hare ranked 53rd in the world in international traffic numbers in 2010, with 10,371,419 passengers recorded, according to Airports Council International.
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