PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No. 5a
Date of Meeting
June 23, 2009
DATE: May 29, 2009
TO: Tay Yoshitani, Chief Executive Officer
FROM: James R. Schone, Director, Aviation Business Development
Deanna Zachrisson, Manager, Aviation Concessions Business
SUBJECT: Procurement for Aviation Concessions Marketing Program
REQUESTED ACTION
Authorization for the Chief Executive Officer to authorize all work, execute Category III
procurement process for IDIQ (Indefinite Delivery, Indefinite Quantity) contract and execute all
contracts, service directives and amendments for professional services to support the concession
tenant-funded joint concession marketing program. Procurement estimated at $250,000 annually
for a period of up to three years ($750,000 total).
SYNOPSIS
Seattle Tacoma International Airport (Sea-Tac) has more than 90 concession locations operating
within the terminal building. As part of the new concessions program, the concessionaires and
the Port agreed that in order to assure success, it would be necessary to inform both the public-at-
large and airport travelers about the wide range of concession offerings. As a result, the lease
agreements between the Port and the concessionaires include provisions for a joint marketing
program, which is a common arrangement at other airports and in shopping areas such as malls.
A portion of lease payments is earmarked for joint marketing, advertising and promotions that
are determined in consultation with the concessionaries. The funds collected for joint marketing
can only be spent on joint marketing activities. This authorization request focuses on hiring a
professional service firm as necessary to support the joint marketing efforts. Such a professional
services contract will enable Sea-Tac to rapidly retain consultation and services during peak
travel periods, for seasonal or holiday offerings, and for other special initiatives and advertising
as determined by the concessionaires and airport staff. Authority to spend marketing funds is
already contained both in the approval of concessionaire leases and in the annual Sea-Tac
operating budget which is reviewed and authorized annually by the Commission.
COMMISSION AGENDA
T. Yoshitani, Chief Executive Officer
June 17, 2009
Page 2 of 3
BACKGROUND
With the creation of the new concessions program in 2005, the Port and its concessions tenants
established a marketing program for the purpose of promoting the quality and variety of products
and services available from Airport merchants at reasonable street prices. Joint marketing
programs have been standard practice in shopping malls for decades, and airports began creating
such programs as most moved away from the master concessionaire business model. Airport
concessions marketing programs are now the norm at airports across the country.
At Sea-Tac, the concessions marketing program is a mutual lease obligation between the Port
and its tenants. All tenants are required to contribute to the joint marketing effort, and the Port is
obligated to work collaboratively to execute the program and use contributed funds specifically
to support tenant marketing only. The Port is required to develop a new marketing plan for the
concessions marketing program every year. The program is overseen by a tenant Marketing
Advisory Group, which meets at least quarterly and represents all categories of concessions
businesses. The Concessions group manages this program with the help of in-house and external
staffing resources.
In the first few years of the new concessions program, it was important to market broadly to the
Puget Sound region about all that was new at the airport. For decades, resident travelers had
grown accustomed to the same concessions, and the same high prices. The marketing program
focused on changing these perceptions and building an expectation among travelers of great
offerings and reasonable street prices at the Airport. Now, as the program enters its fifth year,
and continues to improve, the marketing strategy will shift more emphasis on marketing and
promotional activities in the terminal, with the purpose of influencing impulse purchases among
travelers (and employees) on-site. This has become even more critical as enplanements have
dipped, as well as sales per enplanement.
The tenants are specifically interested in more promotions in the terminal that are tied to an
increased presence on the web. This could include such things as promotions directed to
passengers who use either mobile phones or laptops to access flight and airport information
while in the airport. Using the airport wi-fi network’s ability to identify a user’s location,
passengers could be offered targeted information about the nearest concessions and promotional
offers to encourage sales. In-terminal promotions such as contests, employee specials and
seasonal special events also will continue to drive sales.
PROCUREMENT PROCESS
Since its inception, Concessions managed this program using small procurement contracts with
small businesses. These contracts were usually no more than $25,000 in size for services such as
airport events (for example, Sea-Tac Travel Expo with Rick Steves in 2005 and 2008), terminal
holiday promotions, television commercial production, copywriting, illustration, signage etc.
However, the new procurement procedures at the Port eliminate the use of these types of
COMMISSION AGENDA
T. Yoshitani, Chief Executive Officer
June 17, 2009
Page 3 of 3
contracts for reoccurring needs such as the concessions marketing program. Instead, Concessions
will seek to contract with one marketing communications firm to provide the majority of these
types of services. Concessions is working closely with Office of Social Responsibility and
Central Procurement Office to market this procurement to small businesses, which may in
partnership with other small firms or via subcontracting may be able to provide the full scope of
services required by this program. The Concessions tenants support this procurement as means of
keeping the program vibrant and working in their interests. A tenant representative from the
Marketing Advisory Group will participate in the procurement process reviews/interviews and
help make the selection. With Commission authorization, a Request for Qualifications would be
advertised in late June 2009 and awarded in August 2009.
SOURCE OF FUNDS
The concessions marketing program is paid for by the concessions tenants. The tenants
contribute 0.5% of gross sales monthly per unit, but no more than $24,000 annually. Compared
to off-airport retail, this marketing investment is low due to the airport’s unique position as a
transportation hub. Off-airport restaurants and retail typically re-invest 3-7% of gross sales into
marketing. The marketing program revenues and expenditures are managed by the Concessions
group within Aviation Business Development.
