Portfolio of services: A key driver
of our overall
performance

Our services are an important and rapidly evolving component of our core business, and a key driver of overall Group performance. Today, Schiphol is a thriving marketplace serving a growing community of businesses and their employees. Being able to offer our customers world-class retail, real estate, and parking services therefore remains a top priority for Royal Schiphol Group going forward. This area of our operations links directly to our strategic themes of Competitive Marketplace and Excellent Visit Value, and also encompasses several key business areas, including our Consumer Products & Services and Schiphol Real Estate (SRE) divisions.

Despite ongoing discussion around further growth at Schiphol, our retail and other non-aviation services remain a dynamic and fast-developing area of our Group operations. They are also a key source of new innovations and developments: 2018 saw a number of further developments within our real estate portfolio, as well as the launch of new digital innovations and parking products.

Revenue
(EUR million)
EBITDA
(EUR million)

Consumer Products & Services

With our Consumer Products and Services operation, we aim to create a world-leading airport experience that exceeds the expectations of our guests. To achieve this, we work hard to meet the needs of our customers and develop attractive commercial propositions for passengers, visitors and airport employees alike, all the while supporting the wider ambitions of Royal Schiphol Group.

Given the fast-changing market in which we operate, it is crucial that we continuously improve the way we work in close alignment with our partners, embracing new technologies and ideas where possible. Using a mix of digital solutions and traditional approaches, we remain closely engaged with our customers across all key contact points, as they make use of retail, food and beverage services, and other facilities in the terminal. As we strive for excellent customer satisfaction and a strong NPS score, our focus is on interacting with our customers in a way that is personalised and directly relevant to each individual.

The core activities of Consumer Products and Services include retail, food and beverage, commercial services, parking and mobility services, media, and premium services.

The Elephant Parade

On 1 September 2018, 34 members of the Elephant Parade paid a visit to Schiphol Airport. The Parade is a travelling open-air exhibition that generates funds for Elephant Family, an NGO helping to preserve and protect endangered Asian elephants. The elephants have been on the road since 2007, and on 12 October they left Schiphol for the next leg of their journey: Rio de Janeiro.

Retail and food and beverage

Revenues from retail and food and beverage are an important source of non-aviation income. However, in recent years, airside retail earnings have struggled to keep pace with rises in traveller numbers, reflecting a growing trend towards online shopping among consumers. In 2018, Schiphol's per-passenger airside retail spend totalled 13.13 euros, down from 13.35 euros in 2017. Meanwhile, the average individual's airside food and beverage spend grew by 2.7% to 4.81 euros.

Spend per departing passenger at Schiphol

2018

2017

Index

Retail airside

13.13

13.35

98.4%

Food & beverage airside

4.81

4.68

102.8%

Total

17.94

18.03

99.5%

Amid changing consumer profiles and behaviours, we strongly believe airports can remain highly attractive platforms for retailers and media campaigns. A stronger focus on new brands and partnerships, a more innovative mindset and more flexibility will improve the appeal and accessibility of airside retail. Services is a growth category, as more and more customers put 'experience' at the core of their commercial spending decisions.

2018 saw a number of such initiatives taking place at Schiphol: over the course of the year, we introduced more than 30 new retail concepts, stores and branded shops, including pop-up stores and temporary outlets. Furthermore, we launched two pilot food-delivery services in partnership with Deliveroo and Thuisbezorgd.nl, allowing passengers to order food to their gate and office workers to their work address, respectively. Meanwhile, we continue to promote cross-pollination between media and retail through innovative campaigns and concepts.

We continue to develop personalised online marketing via the airport’s wifi service. Going forward, we plan to increasingly leverage technology, as well as data and insights, to introduce new retail and dining concepts and develop a high-quality, customer-oriented approach.

Number of outlets at Schiphol

Airside

Schiphol Plaza

Food & beverage

78

32

Retail

137

45

Services

14

7

Total

229

84

The world's smallest ad agency

On 14 May, the Schiphol Media team opened 'The Smallest Ad Agency in the World' at Jan Dellaertplein. Six teams of two creatives manned the agency for 24 hours in a tiny office in the centre of the square from where they drew up fresh campaign ideas for companies looking to advertise at Schiphol. The advertisers had the option of submitting briefings to the creative team. A total of 90 briefings were received, surpassing all expectations.

By the end of the 24-hour marathon, 19 brand-new campaign concepts had been created. Booking.com, the Van Gogh Museum and Tony’s Chocolonely were just some of the satisfied advertisers, along with early-stage companies Ace & Tate, and Chinese electric scooter maker NIU.

Several non-profit organisations and social enterprises also made use of the Media team's services: the Melanoma Foundation wanted a design to inform travellers about the importance of good sun protection, while MISCQ was looking to drive awareness of its innovative plastic substitute made from elephant grass paper. Schiphol is currently working with several of these organisations to put their ideas into practice.

Parking

In 2018, revenues from parking totalled 80.10 million euros. This is a decline in growth, which was largely attributable to a reduction in our overall parking capacity during the first half of the year following the demolition of the P2 parking facility, in late 2017, to make room for the construction of the new pier and terminal. Fortunately, we were able to reuse 99% of the concrete from the P2 garage for the renovation of the Sierra Platform. This resulted in a 35,000-tonne-reduction in the use of raw materials, saving around 900 truck movements.

In addition, the P3 long-stay parking garage was closed for three months of the year for extensive expansion and renovation work. These capacity constraints were offset by our new P4 basic parking product, introduced in April 2018. The P4 car park offers 2,500 parking places to provide sufficient parking capacity in busy times. In addition, September saw the launch of a new 'free-floating' car-sharing service, car2go, which has made electric cars available to travellers at the P1 WTC Schiphol Airport car park. A number of additional electric charging stations were also installed throughout our car parks during the year.

We will continue to expand our parking product offering in 2019. In particular, the P3 redevelopment project is due for completion in spring. As well as offering 2,500 additional parking spaces, the renovated multi-storey parking garage will include a new canopy, as well as a new 22,000m2 roof on which 6,072 solar panels will be installed. Combined, the panels will generate a 1.8MWp, power supply, equivalent to 600 households. This feature, which is being developed in collaboration with Dutch energy supplier Eneco, allows Schiphol Parking to source 20% of the power needed to run the airport's parking facilities from locally generated solar energy, including the use of the electric charging points.

Pray, meditate and relax in silence

In April 2018, a new Meditation Centre was officially opened on the second floor of Departure Lounge 2 at Schiphol. This is a unique location: no other airport in the world offers a space for silence beyond security that is open to people of all faiths and convictions. The Centre is also the working base of the Airport Chaplaincy and its team of volunteers. Around 60,000 people, mostly travellers, come here during the year to pray, meditate, or receive spiritual support. The Meditation Centre is also used as place of worship for terminal-based employees.

Expanding Privium and VIP service

Privium, Schiphol’s service programme for frequent business travellers, continued to grow over 2018, with the total membership base rising beyond 65,000. A second, temporary Privium lounge, after security control, opened its doors in late 2017 and proved highly popular among members. This lounge will be expanded and renovated in order to create a larger, permanent facility. We also began renovating and enlarging the Privium security and border passage gates in the terminal in the latter part of the year, as a result of which Privium Card holders will soon be able to travel with even greater speed and comfort through Schiphol.

Additional recent enhancements to our Privium service include the introduction of a new centralised database for storing biometrics relating to memberships. The new data storage system, which fulfils all privacy regulation requirements, makes it easier for Privium members to organise and make changes to their membership.

The renewed Schiphol VIP service, an important service proposition aimed primarily at premium business travellers, is also proving highly popular, with more than 17,500 arriving and departing VIP passengers during 2018. We plan to renovate and increase the capacity of the VIP Centre in the short term to accommodate increasing demand for the service.

Real estate

Driven by a favourable business climate in the Netherlands, demand for premium real estate at prime locations is rising across the Amsterdam Metropolitan Region (MRA). In 2018, Schiphol's overall (commercial and logistics) average occupancy rate rose to 91.1%. Demand was particularly strong in the commercial property segment: we achieved a 91.7% tenant occupancy level across our rented office locations, with occupancy especially high throughout Schiphol's Central Business District. We also welcomed several new globally operating companies as tenants, including Honeywell and Heineken. The occupancy rate for our warehouse buildings, meanwhile, was 93.2%.

Average occupancy rate of commercial real estate
(in %)

Amid growing demand for office rental properties, we further expanded our commercial real estate capacity during the year with the addition of several new development projects. In December 2018, Schiphol, in collaboration with Microsoft, opened the refurbished 'Outlook' SMART building. Meanwhile, the new The Base D office complex and car park moved closer to completion, with construction work set to finish in the third quarter of 2019. Work also continued on three further projects: the Tristar 1 office block, the new Air Traffic Control the Netherlands (LVNL) building and the KLM Business Lounge for non-Schengen passengers. Several other major projects are in the pipeline for 2019 and beyond. As part of the Terminal 1 redevelopment, Schiphol Real Estate will oversee construction of new offices, business class lounges and other business premises in the terminal. We are also developing a new office building in the Central Business District.

Real estate portfolio per category
(as a % of total real estate portfolio of 673,066 m2)

In the logistics real estate category, we continued to experience excellent occupancy rates across the first-tier cargo buildings at Schiphol. Again, this highlights robust demand from local operators as well as the unique nature of our cargo offering, including the airport's good operational efficiency, its efficient Customs procedure, the excellent connections with the rest of Europe, and Schiphol's strong network of cargo businesses. In 2018, we began preparatory work on a new first-tier cargo building at Schiphol-Southeast. This extensive development will replace much of the logistics space that is being lost through the Taxiway Quebec expansion project, which is resulting in the demolition of several cargo buildings at Schiphol-South. The new development will also include a parking area for heavy goods vehicles, complete with eating and washing facilities, as well as a waiting area for drivers. An innovative call system will also alert drivers when it is time to load or unload goods, minimising wait times and increasing road safety.

'Flex and connect'

As well as offering high-quality physical spaces, it is important that we continue enhancing our real estate product by offering value-added services that meet the current expectations and demands of tenants. To this end, SRE has developed a flexible commercial lease concept called 'Flex', through which we offer tenants the opportunity to adjust and scale up their leases according to the changing needs of their business. Furthermore, through new initiatives such as Spacemaker, companies are able to sublet rooms for meetings and workshops to other users on a short-term basis via an online marketplace. We have also launched a pilot scheme with technology company, Smart Parking, through which customers offer their parking spaces to other tenants on an ad-hoc basis.

'The Outlook': Schiphol's first SMART office

On 1 December 2018, the renovated Outlook building opened its doors, becoming the first SMART office building on the Schiphol site. The building, which houses Microsoft's Dutch headquarters, was extensively redeveloped by the company in collaboration with Schiphol Real Estate. The renovated building uses SMART technology to understand and improve the experiences of both Microsoft employees and building visitors, while also providing a number of important sustainability benefits.

'The Outlook' is equipped with an intricate network of sensors. These gather information on how users interact with the building, measuring occupancy rates and energy usage, as well as key ambient conditions such as noise levels, temperature, CO2 levels and light. Greater insight into these processes will allow Microsoft to use its workspaces in a way that is healthier and more energy-efficient. The information generated by the building will also assist Schiphol in expanding the SMART concept to other properties around the airport site.

Community and networking opportunities are also important drivers of tenant satisfaction and retention. Through the SPOT Schiphol Community, which is part of SRE's wider 'Connect' concept, we have created a collaborative environment where employees of the 500+ companies located on the Schiphol site can meet online and offline to network, share ideas and take part in discussions and events. The SPOT community grew by 25% in 2018 to more than 3,500 individual members. In October 2018, we also launched a pilot version of the Spot Schiphol Smart App, allowing community members to book meeting rooms, register for community events, order meals from the restaurants in Schiphol Plaza, and expand their local network.

Sustainable, healthy, smart

As we maintain and develop our real estate portfolio, we are conscious of the potential impact on the environment, as well as our responsibility to ensure the health of the people working in these spaces. In this sense, our long-term real estate ambitions are closely aligned with the Group's wider health and sustainability objectives, to become both a zero-waste and zero-emissions organisation by 2030. We are also exploring ways to make our properties energy-positive in the near future. In the short term, we will be strengthening our energy-reduction efforts by installing underground aquifer thermal energy storage (ATES) systems at WTC Schiphol 1 and The Base.

We will continue using the BREEAM assessment method to monitor the overall sustainability performance of our commercial buildings. Steadily, we are introducing state-of-the-art SMART infrastructure technologies that allow us to monitor and support our health and sustainability goals and to promote 'Flexibility, Connectivity and Efficiency' with regard to the use of our properties. Our Healthy Office pilot is already providing valuable insights with a view to improving the wellbeing of our tenants going forward.

Our long-term aim is for all buildings on the Schiphol site to be sustainable by design and to be built using circular, environmentally friendly construction practices. Reaching this objective will be a collaborative process involving various partners across the value chain. In January 2018, we launched the Sustainable Main Contracting initiative to ensure all third-party construction contracts contain clear guidelines with regard to maximising energy-efficiency and climate comfort. Further information on Schiphol's circular transition effort can be found in Raw materials and residual flows, in the People, environment and community section of Our results.

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Embedding technology and data into our chain