The concession business

The concession business

The Group performs food & beverage and retail operations under concession contracts.

The concessions are finite and limit use of the area to the provision of specified services to the public.

The concession holder, in addition to providing the service, agrees to pay rent – which may be conditioned on various factors – and often to make investments in the facility. Provision of the service is monitored by the landlord.

Most concession contracts are awarded through competitive bidding; their content (duration, amount of rent, investments, etc.) varies according to the business channel and type of service. In some cases, contracts are awarded through direct negotiation.

Motorway concessions are generally valid for 10 to 25 years (with peaks of more than 30), compared with an average of 5-10 years for an airport contract. Contract duration can also vary by type of business: in general, food & beverage concessions are longer than those in the retail sector because they require more extensive investment.

Rent can be fixed, variable (indexed to revenue or profitability), or a combination of both.

The system for evaluating competitive bids can differ according to the sales channel, type of business, and country. The main selection criteria are usually:

  • the quality of the business proposition;
  • the brand portfolio;
  • the design and layout of the venues;
  • the operator's expertise and track record;
  • the financial commitments assumed in terms of investments and rent.

In order to bid successfully on an international scale, companies need to have extensive know-how, high standards of quality and value for money, and the capacity to differentiate in order to satisfy local tastes.

In the shipboard and flight catering business, services are governed by contracts negotiated directly with the ship operators and airlines, and require investments in equipment that are more limited but highly specialised.