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A Blog Post

Technology Optimizes Airport Property & Revenue Management

Proactive Business Support from Robust Airport-Specific Property & Revenue Management Technology.

June/July, 2014, Airport Magazine, By Brad McAllister

Property and revenue management solutions are abundant in today’s technology-centric business environment, and many address the needs of multiple industries. However, airports, with their complex business processes and requirements, benefit from a specialized solution.

Airport-specific property and revenue management technology provides a multitude of benefits for a number of airport departments, including proactive contract management, comprehensive configuration capabilities, enhanced accountability, and increased accuracy of data and billing.

Large Airport: LAWA

Valerie Hunter, assistant division manager at Los Angeles World Airports (LAWA), began working with a property and revenue management system in 2001. “All of our revenue divisions use the system; everything we invoice goes into it, such as airport commercial development, which includes properties, concessions, and residential acquisition,” she explained.

Airport police use the system for TSA agreements, and operations personnel use it for landing agreements. “We have finance groups that use it mainly for reporting purposes, and we use it for invoicing,” Hunter said. “My section is responsible for managing the software, so we do system administration and set-up, maintain the roles and security, develop the billing rules, and are the keepers of the aviation statistics data. We enter the data and we report it worldwide, so we not only report the data to our executive management but to the various news and press outlets as well. It also goes to the mayor’s and governor’s offices.”

LAWA tracks and processes $1 billion in monthly revenue in its property and revenue management system. That effort encompasses 3,696 contracts, including agreements for all airports in the LAWA system.

According to Hunter, the system works well for what the organization’s management requires. “Aviation is a different animal than most industries. The terminology, the way we do our rates and charges; it’s been critical to have an aviation-specific solution,” she said.

“There are many benefits to having all of this data in a consolidated location,” Hunter said. “With the system, we are able to bring all of the information together and house it in a single database; this allows us to create reports that represent a single version of the truth. Prior to this technology, we had a very challenging time with our accounts receivables. Implementing the system has allowed us to reduce our outstanding receivables over the years significantly — so significantly that the story landed in the national papers.”

Before the system, LAWA also had an issue with its Faithful Performance Guarantee, which functions as a security deposit in the event a tenant does not pay what it owes. Some 22 percent of tenants were not in compliance with the guarantee; now, LAWA maintains close to 100 percent compliance.

“We use ‘ticklers,’ which are automated notifications that inform us of critical dates related to tenant contracts and rent agreements,” Hunter said. “There has been a significant improvement in our overall business processes; the system provides better visibility, increased accountability, and a single version of the truth when it comes to the accuracy of the information.”

Hunter said that she would like the system to have mobile functionality. This would provide airport and airline staff the ability to use personal devices to access property and revenue management information in real-time, transmitting data in a way that would allow the airport to become more flexible in allocating personnel and managing resources.

Medium Airport: Southwest Florida International

Brian McGonagle, director of finance for the Lee County Port Authority, explained that, “We bill something like $88 million per year using (a property and revenue management system). We currently have some 250 active tenants in the database.”

The airport’s property and revenue management software is a billing system that interfaces well with the airport’s general ledger (GL), he said. “The airport is required to use the county’s GL system, so our system is the airport-specific billing system that integrates with the county’s GL.”

McGonagle noted that, “The biggest value the system provides is accountability and accuracy in billing. Like many airports, we have a properties department and a finance department. The system effectively directs the two departments to work together. This is critical; it provides an integration point. Properties enters the contracts into the system and helps us create the terms of the agreements and the bill rules, and then the finance department bills the tenants using accurate data.

“The software has powerful notifications functionality,” McGonagle said. “For example, if I want a list of every agreement with contract expirations due in the next 30 days, I can get that very easily. I can now get a weekly report on any agreement that’s due for a CPI (consumer price indexing) increase in the next 30 days. That way I can notify the tenants that their rent is going up.”

With regard to non-aeronautical revenue tracking, “We put all non-aeronautical revenue in the system, including restaurants, retail revenue, gas stations, hotels and airport parking,” he said. “The system also provides monthly statistical data, as well as historical data, that allows us to forecast and better manage our budget.”

Further, the airport is able to retrieve a history of passenger growth with the system, such as the number of passengers brought in by any airline for any month; the history of each concession in the airport and exactly what it brought in; and what it paid the airport. “I can look at gross and net revenue from every restaurant in the airport. That helps me effectively project were we are going to be a year or two from now,” McGonagle said. “All our space in the terminal — every square foot — is tracked in our property and revenue management software. It’s important to track passengers and sales by concourse to see which tenants are performing best. If operations is looking to move an airline, or the properties department is looking to move a retail or concession operator, they rely on me to provide the performance data for those tenants.”

Small Airport: Northwest Florida Regional

With enplanements just under 400,000 per year, Northwest Florida Regional is a small airport with an incredible number of contracts and lease agreements. Administration Manager Jon Morris explained, “At first, the auditors told us we had to have something like an Excel spreadsheet for tracking all of the airport agreements. We gave that a try but were still missing stuff. Each of our tenant contracts is so different; they all have different terms, different formats, and different payment schedules.”

The airport chose to implement a hosted version of an airport-specific property and revenue management system, which allows the airport to use system functionality without any associated infrastructure on-site.

“The typical implementation, before the hosted technology was developed, was cost-prohibitive for an airport this size,” Morris said. “The hosted solution really enabled us to bring this system online; we needed a scalable solution at a cost point that made sense.” The most tangible benefit of the system, according to Morris, is that it not only enables the airport to manage all contracts and leases efficiently, but it also provides the ability to handle the airport’s billing and collections processes as well.