In this segment from Industry Focus, Vincent Shen and Asit Sharma discuss some of the less bullish details behind airport retail dynamo Hudson Ltd. (HUD).

From minimum payments to shareholder control, the team compares Hudson to another operator in the airport industry.

A full transcript follows the video.

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This video was recorded on March 20, 2018.

Asit Sharma: Those of you Fools listening today who are subscribers to some of our Premium services have come across companies like Grupo Aeroportuario del Pacífico, which is a company that I cover for Premium services each earnings quarter. You're probably familiar with this idea of traffic flow into airports. When you have a growing economy -- and this company I just mentioned is an airport operator in Mexico, where the travel business is booming both for tourism, domestic travel, and business reasons. Here in North America, we're not doing so badly, either. We're growing at that 3% to 4% clip. When you have that, and you have these fixed locations within the airports, you stand to benefit.

Really briefly, I want to mention some of the risks involved in that model. This has to go with the way the leases are spelled out. Usually, you're exposed to something called a minimal annual guaranteed payment to your landlord when you win an airport concession. That means, let's say a terminal decides to move some of its flow to another terminal. You're stuck there. You have to make a minimal payment to your landlord every year that's based on an agreed-upon formula. A big travel event like 9/11, which unfortunately can really hit the industry hard, is also a risk that you face when most of your business is in the airport terminals. On the other hand, Hudson is a well-known name, so in competitive bid situations where they look to expand, they have an edge over their competition in that airports recognize that this brand brings in travelers.

I want to put one more qualitative piece to why that traffic grows so much. Vince, you mentioned people planning in time, this is called dwell time, maybe, to shop on their way between destinations. Sometimes, and this has happened to me on many an occasion, you're stuck in an airport and sheer boredom makes you spend. After an hour or two, I get bored, I have to have something to read, or I need to buy some gum or maybe a T-shirt to take home. I think that's an important part of this business model. A less-celebrated aspect.

Vincent Shen: Sure. I think that's a good transition point for us, in terms of some of the risks that you mentioned. I think, the things that really have weight here in my view for this company and this stock are the last couple topics that we'll cover here. First, some of the issues with the relationship that Hudson has with its controlling shareholder, Dufry; and second, there's the longer-term road map for expansion for this company.

Again, as you mentioned, Asit, you have to keep in mind that Dufy holds all of the class B stock, those 10 votes per share. I think it has over 90% of the voting interest in Hudson. It's always something for investors to keep in mind when another entity has that controlling interest, we like to call that out when evaluating a stock and because that affects some of the actual business relationship that Hudson has due to its obligations to deal with Dufry, in terms of certain supplier relationships and things along those lines.