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DFS completes sweep,
lands airport retail pact

The company retains control of
concessions with a $47.25 million bid
on the heels of its duty-free shop contract

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By Russ Lynch
Star-Bulletin

DFS Group will continue to operate the $40 million-a-year retail concession at Honolulu Airport, after offering to pay the state at least $47.25 million in rent over the next five years.

DFS, which earlier was the only bidder for a five-year contract to run the duty-free business at all Hawaii airports, with an offer of $60 million a year in rent, was also the only bidder for the Honolulu non-duty-free retail rights.

Its bid, opened yesterday afternoon in a state Department of Transportation conference room at the airport, was an offer of $9.2 million rent in each of the first two years, $9.45 million in each of the next two years and $9.95 million in the final year.

The state airports division had set a minimum of $8.75 million a year, or $43.75 million for the five-year contract.

If business gets strong enough, DFS could wind up paying 20 percent of its gross revenues, because the rules set by the state say the contractor must pay the higher of its minimum guarantee or 20 percent of the gross.

In the last contract, gross revenues ran at about $40 million a year.

DFS still has to be legally confirmed so it does not yet have the contract but since it is already in place, no complex transition is required.

The retail operations, consisting of 37 outlets of varying size throughout the sprawling airport complex, formerly were broken up into four separate contracts but DFS in recent years held all of them.

The new contract is for the period from March 15 this year through March 14 2006.

DFS Group, which does business as DFS Hawaii, is a wholly owned subsidiary of international luxury retail goods giant LMVH Moet Hennessy Louis Vuitton. It has had business operations at Honolulu Airport in some form since the early 1960s.

It is a retail giant in Hawaii because, in addition to airport operations, it has famous-brand retail stores throughout the islands and is putting the finishing touches to a new $65 million DFS Galleria Waikiki on Kalakaua Avenue.

A separate contract for the Honolulu Airport floral concession, worth about $2.7 million in annual revenues according to state bid documents, went recently to the existing holder of that concession, Greeters of Hawaii.