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Politics & Government

Westfield Awarded $331M LAX Concessions Contract

Mall operator Westfield Group will manage the concessions at the Tom Bradley International Terminal, Terminal 2 and the Theme Building at Los Angeles International Airport. The company plans to bring local businesses into the mix.

The Los Angeles Board of Airport Commissioners which oversees Los Angeles International Airport, voted unanimously today 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.

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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.

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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."

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