THURSDAY 18 AUGUST 2005
WELCOME to The Moodie Report.
FAST, FACTUAL, FREE PERSONALITIES OF THE WEEK
It’s been a momentous week in Australia with the return of a powerful force and the established players having to seriously reassess their game plans as a result. But enough of the All Blacks’ victory over the Wallabies – the real talking point was the re-entry of James Richardson to the Australian – and New Zealand – duty free market, confirmed by Executive Chairman Garry Stock to The Moodie Report earlier this week. Any relative newcomers to the business may not be aware of the company’s long-standing importance to the Australian duty free business but, for over 20 years until it sold its store chain to Swissair in 1995, David Mandie’s firm was a powerful and successful player in the channel – particularly with its off-airport shop network. The company’s re-entry ten years later is into a markedly changed environment, one in which off-airport or downtown shopping simply doesn’t have the hold it once enjoyed. The introduction of GST, vastly improved airport shops, tough domestic market competition and the robust Aussie Dollar have all changed the rules of engagement. Nuance, for example, has made it clear that it will only run downtown shops where required under the terms of an airport contract. Rival DFS remains committed to the sector – but mainly at the luxury end of the market, with its DFS Gallerias. But one suspects that as owner operators James Richardson knows exactly how to make the business tick. And more importantly, that the downtown business is partly a means to an end. Bigger spoils await – the airport business. Garry Stock confirmed the company would eye any opportunities that arise and it wasn’t long before those words became reality when Wellington Airport across the Tasman announced today (Thursday) that JR Duty Free was among a surprisingly heavyweight line-up ready to bid for the New Zealand capital city’s duty free business. With Nuance having just split its Australasian operation away from Asia (as reported last week) and now under the leadership of Christian Strang, it’s all change down under. Elsewhere too it’s been an eventful week with booming passenger numbers in Hong Kong, Seoul Incheon and Brisbane and consistently good figures around the aviation world; plus important news of a major new Thai retailer (Sawasdee Duty Free Plaza).
THE MOODIE REPORT
DATA ROOM – TRAFFIC NEWS
AUSTRALIA.
Brisbane Airport Corporation (BAC) this week unveiled record monthly international passenger numbers for July. Of the 350,300 passengers, 194,800 were arriving and 155,500 were departing travellers. The new figures represent a +12% increase compared with July 2004, and the result beat the previous record of 332,400 movements set in December 2004. BAC Corporate Relations Manager Jim Carden welcomed the new milestone which, he said, reflected the growing importance of Brisbane Airport to regional prosperity and economic growth. “The July 2005 milestone comes on the back of 24 consecutive months of international passenger growth,” said Carden. “More than ever Brisbane Airport is becoming an indispensable asset for Queensland’s tourism industry, which is why BAC has committed A$1.5 billion over the next seven years to invest in runway, terminal and road improvements to meet future travel demands.”
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David Mandie: It’s 33 years since this great veteran of the Australian duty free industry opened the first James Richardson store (at Brisbane Airport). Now after a ten-year absence from the Australian scene his company is preparing for re-entry (page 6). Another chapter in a stirring family history is about to be written. Anette Thisgaard: The Moodie Report is a staunch advocate of the concept of ‘A Sense of Place’ – airports that try to capture the traditions, tastes and spirit of their respective city or country. The International Marketing Director for Toms is justifiably proud of Anthon Berg’s delightful new stand-alone store within Nuance’s revamped Copenhagen Tax-Free Shop. QUOTE OF THE WEEK
“We’re delighted with the store which will be the best-fixtured duty free shop in Egypt and we see it as a new benchmark for the country.” Aer Rianta International–Middle East Managing Director John Sutcliffe in enthusiastic mood as the regional retailing powerhouse gets set to open a 2,000sq m post-arrivals duty free shop at the City Stars Retail & Entertainment Complex in Cairo’s upscale Heliopolis area.
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The Moodie Report
Selected traffic numbers reported in the past week Country
Airline/Airport
July ’05 vs July ’04 (%)
Australia Austria Brazil Canada Canada China Finland France Germany Germany Hong Kong Iceland Jordan Latvia Malta Norway Portugal Singapore Slovenia Spain Sweden Switzerland Switzerland Switzerland UK US US
Brisbane Airport Austrian Airlines Group GOL Air Canada WestJet Hainan Meilan Airport Helsinki Vantaa Airport Nice Côte d’Azur Airport Frankfurt International Airport Munich Airport Hong Kong International Airport Icelandair Royal Jordanian airBaltic Malta International Airport Oslo Gardermoen Airport Lisbon Airport Changi Airport Adria Airways Spanair SAS Scandinavian Airlines Geneva Airport SWISS Zürich Airport Newcastle International Airport American Airlines American Eagle Airlines
+11.6 (international) +16.2 (total pax) +62.1 (RPK) +6.8 (mainline RPM) +19.9 (RPM) -7.3 (total pax) +6.8 (international) +6.9 (international) +5.2 (total pax) +12.0 (international) +10.3 (total pax) +16.2 (international) +3.8 (total pax) +74.5 (total pax) +2.2 (international) +8.5 (international) +4.7 (total pax) +8.2 (total pax) +10.2 (total pax) +17.2 (total pax) -2.7 (total pax) +11.3 (total pax) +10.5 (total pax) +5.2 (total pax) +7.5 (international) +9.7 (total pax) +10.9 (total pax)
Thursday 18 August 2005
The best performing travel markets were South Korea, which showed +27% growth, and the USA which increased by +18%. The Australian international travel market was up by +14% and New Zealand travellers increased by +12%. The Nuance Group is Brisbane’s duty free retailer. Because Nuance’s concession fees at its key airport contracts in Australia are linked to passenger numbers, an increase in the base number is not always good news (if spending is soft). But the retailer will be encouraged by the improved South Korean numbers, as their spending level is traditionally high.
DENMARK/ INTERNATIONAL. Airport operator Copenhagen Airports has reported that total passenger traffic in July grew by +9% year-on-year to 574,230 at its Newcastle International Airport in the UK. For the year to date Newcastle’s total passenger numbers rose +12% to 2,938,299.
At China’s Hainan Meilan Airport total passenger traffic fell by -7.3% to 578,600 in July. For the year to date Hainan’s total passengers fell by -6% Note: ‘total pax’ may include domestic traffic to 4,208,000. As previously reported, Source: ©The Moodie Report Grupo Aeroportuario del Sureste, which operates nine airports in Mexico, has reported that total passenger traffic in July decreased by -6.2% to 1.3 million, reflecting the impact of Hurricane Emily, which temporarily closed Cancún, Cozumel and Mérida airports.
EUROPE.
Total passenger traffic at European airports rose +6.5% year-on-year in June, buoyed by the traffic growth at Group 4 airports (those welcoming less than 4 million passengers per year), according to Airports Council International (ACI) Europe. During the first half of 2005 total passenger traffic rose +5.8% against the corresponding period in 2004. June saw Group 4 airports posting a +10.6% year-on-year increase in traffic, and a jump of +19.3% over June 2003. Group 1 airports welcomed +4.5% more passengers compared with the same month in 2004. Group 2 airports saw a +6.4% rise over June 2004, and Group 3 airports climbed +8.0%. Some of the airports that experienced the highest passenger increase in June 2005 over June last year are: ■ Group 1 airports: Munich (+10.3%), Rome Fiumicino (+6.4%) and Paris Charles de Gaulle (+5.6%) ■ Group 2 airports: Moscow Domodedovo (+14.8%), Barcelona (+9.7%), and Dublin (+9.3%) ■ Group 3 airports: Budapest (+27.2%), Cologne/Bonn (+19.4%) and Warsaw (+19.1%) ■ Group 4 airports: Rome Ciampino (+95.1%), Bournemouth (+90.6%) and Katowice (+87.3%).
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Selected traffic numbers reported in the past week (continued) Country
Airline/Airport
July ’05 vs July ’04 (%)
US US US US US US US
ATA Airlines Continental Airlines Hawaiian Airlines JetBlue Airways Pittsburgh International Airport Southwest Airlines Spirit Airlines
-46.7 (total pax) +3.1 (mainline pax) +2.5 (total pax) +25.9 (total pax) -65.5 (international) +12.2 (total pax) +0.6 (total pax)
Country
Airline/Airport/Association
Jun ’05 vs Jun ’04 (%)
Australia Canada Germany Malaysia Malta US US US US US US US US US US US
Sydney Airport Montréal Trudeau Airport Cologne Bonn Airport Malaysia Airlines Malta International Airport Austin-Bergstrom Int. Airport Charlotte/Douglas Int. Airport Houston Bush Intercont. Airport Minneapolis St Paul Int. Airport Orlando International Airport Orlando Sanford Int. Airport Phoenix Sky Harbor Int. Airport Pittsburgh International Airport Portland International Airport Southwest Florida Int. Airport Spirit Airlines
+4.0 (international) +11.1 (international) +18.4 (total pax) +15.8 (international) +0.7 (international) +3.9 (total pax) +16.4 (international) +9.5 (international) +24.0 (international) +19.6 (international) +8.3 (total pax) +13.5 (international) -70.3 (international) +15.3 (international) +14.9 (total pax) +4.9 (total pax)
Thursday 18 August 2005
Note: The monthly Airport Traffic Report includes 92 airports in total. The airport groups are divided into four groups based on yearly passenger figures from 2004: ■ Group 1: Major airports welcoming more than 25 million passengers per year ■ Group 2: Large airports welcoming between 10 and 25 million passengers per year ■ Group 3: Medium-sized airports welcoming between 5 and 10 million passengers per year ■ Group 4: Small airports welcoming less than 5 million passengers per year.
HONG KONG.
Passenger traffic at Hong Kong International Airport reached an all-time monthly high of 3.79 million in July, a +10.3% increase year-on-year. Airport Authority Hong Kong attributed the increase to more people taking their summer holidays, coupled with increased visitor and transfer traffic, especially on mainland China, Taiwan and Australia–Asia routes.
The latest figures are a further boost for the airport’s commercial operators, Note: ‘total pax’ may include domestic traffic already buoyed by an outstanding perSource: ©The Moodie Report formance for the year ended 31 March. In the financial year retail licences revenue enjoyed impressive growth of +46% and +24% as compared with last year and 2002/03 respectively. Total retail licences revenue amounted to HK$1,685 million (US$217 million) representing 26% of total turnover (2004: HK$1,156 million). Together with increased purchasing power, especially by Mainland China residents, a corresponding increase in passengers’ spending was also witnessed.
SOUTH KOREA.
Passenger volume at Seoul Incheon Airport totalled 2,199,780 for the month of June, or 73,326 per day. Changes in the daily average were +9.3% relative to the previous month and +12.3% compared with the same period a year earlier. International passengers reached 2,158,501, 98.1% of the total, up +10.2% on last June. For the year to June international passenger numbers were up +12.5%.
THE MOODIE REPORT DATA ROOM: TRAVEL & TOURISM NEWS
ASIA PACIFIC.
Intra-Asia travel continued to rise for the third straight month in June, accounting for 82.6% of the bookings recorded on the Abacus system, according to figures released by the region’s leading travel facilitator, Abacus International. Total June bookings on the Abacus system dipped slightly (-3%) over the previous month. but remained steady compared with the same period last year, at +2% more than June 2004.
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Thursday 18 August 2005
Long-haul destinations gained favour among Asian travellers this holiday season, with June bookings to Europe, the South Pacific and the USA increasing by +13%, +9% and +1%, respectively, over the previous month. “Overall we are continuing to see solid growth in Asia Pacific travel, with bookings for the first half of 2005 posting a +3% increase over the corresponding period last year,” said Abacus President and CEO Don Birch. “The increase in long-haul destinations can be attributed to the June holiday season, which is traditionally the period when travellers tend to make longer trips.” June FIT bookings posted a year-on-year growth of +4%. For the full, detailed report go to www.TheMoodieReport.com
CHINA.
Two million mainlanders took an overseas trip in the past 12 months, and the Chinese appetite for international travel remains unsated, according to an important new study from leading market research company ACNielsen. The report reveals that 7% of Chinese in the three key cities of Beijing, Shanghai and Guangzhou took an overseas trip in the past 12 months – and the same percentage already have plans for an overseas trip in the next year. Chart 1: Duration of international trips
Chart 2: Top three international destination options 17%
20%
■ More than 15 days 19%
51%
7% 16% 14%
13%
■ 4–7 days ■ 1–3 days
12%
23%
■ 8–15 days
22%
Thailand
Singapore
14% 12%
Hong Kong
Singapore
Thailand
■ Guangzhou ■ Shanghai ■ Beijing 32%
Hong Kong
27% 11%
Base: N = 1249
Base: N = 212
Source: AC Nielsen
Source: AC Nielsen
“China is now ranked among the world’s top outbound tourism nations. Tourism is booming here, with an increasing number of people packing their suitcases for international as well as domestic travel,” added ACNielsen China Managing Director Glen Murphy. “Our recent surveys all recorded strong growth in outbound travel among Chinese citizens. In view of China’s huge population and Chinese people’s increasing spending power, this presents enormous business opportunities for the tourism industry in many other parts of the world,” he says. The 7% of respondents who travelled overseas in the past 12 months represent over two million residents in the three key cities. Outbound travel was highly skewed towards high income groups, with 14% of people of monthly household incomes over RMB5,000 claiming to have travelled outside China. The ratio for respondents with medium (RMB2,500–4,999) and low income (below RMB2,500) was 4% and 2% respectively. “Outbound tours take time and financial investment, and therefore remain a privilege for the more well-off Chinese people,” said Murphy. “The recent appreciation in the value of RMB will certainly help encourage Chinese consumers to continue to spend.” As to the purpose of an outbound trip, 60% of travellers claimed to travel for leisure, and only about one fifth (18%) travelled for business. For respondents with high incomes, over half (52%) travelled for leisure and over a quarter (26%) went on business trips, while for respondents with medium incomes, the percentage travelling for leisure was even higher (70%). Hong Kong (23%) and southeast Asian countries such as Singapore (16%) and Thailand (13%) were the most popular destinations for Chinese travellers. Hong Kong was the most appealing among Cantonese
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Chart 3: Planned destination (international) Hong Kong
Thursday 18 August 2005
Chart 4: International tour group membership 22%
5% Singapore
15%
Thailand
■ Tour group
14%
Japan
11%
Malaysia
8%
France
8%
USA
8%
37% 58%
■ No tour group ■ Don’t know
Base: N = 229
Base: N = 229
Source: AC Nielsen
Source: AC Nielsen
and Shanghainese, with about a third of travellers in both cities claiming to have travelled to Hong Kong in the past 12 months, while Thailand was favoured most by Shanghainese (22%). According to ACNielsen, 7% of respondents wish to make an overseas trip in the next 12 months. High-income groups formed a greater proportion of potential travellers, with 13% claiming to have an overseas trip planned. Consistent with those who had travelled during the past 12 months, Hong Kong and southeast Asia countries still remain the hot spots for those potential outbound travellers. ACNielsen found, however, that longer-distance trips were likely to increase in popularity in the near future, with 8% of respondents planning a trip to the USA and another 8% to France. Travelling with a tour group remains the preference for outbound travellers. About 58% of respondents preferred to join tour groups for international trips, while less than two fifths (37%) chose to go on self-arranged tours. For the full report see www.TheMoodieReport.com
THE MOODIE REPORT
DATA ROOM – RETAIL SALES RESULTS
SWITZERLAND. The Nuance Group has reported total first-half revenues of CHF783.6 million (US$617 million) for the first six months of 2004, down from CHF809.3 million. On a like-for-like basis, however, and excluding the impact of foreign exchange movements, revenues were in line with last year, the company said. Sales increases in North America (+5.6%) and Asia (+19.9%) were offset by lower volumes in Europe (-6.8%). Europe has been hit heavily by the opening of the second terminal at Antalya airport, where Nuance does not operate the concession. Excluding Turkey, the European region’s revenues were flat when compared to 2004. The Group recorded EBITDA of CHF10.6 million, falling from CHF12.0 million last year for the six-month period. However, on a like-for-like basis and excluding the impact of foreign exchange movements, EBITDA improved by +43.3% versus the first half of 2004, “demonstrating the better underlying performance in the business, with the Group benefiting from operational improvements”. The Group’s profitability, however, has been affected negatively by Australia and Denmark, where per passenger guarantee contracts are in place with the respective airports. In the second half of the year, the Group anticipates a continually challenging environment (especially in the above-mentioned countries). At the same time, Nuance expects operational improvements driven by major retail projects and refurbishments in various locations across the network. In related news The Nuance Group’s 50% co-parent company Stefanel has reported that Nuance’s net profitability narrowed to a loss of €4.3 million for the first half. This represents a strong improvement on the €5.5 million loss for the same period last year. The Nuance Group represents 70% of Stefanel’s sales. Nuance saw a positive trend
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Thursday 18 August 2005
in the number of passengers, Stefanel said, but this was offset by lower spending in some locations. “To deal with this trend, the company has launched an in-depth analysis to improve the sales organisation, and the first results of this should emerge in the second half,” it commented. Stefanel revealed the Nuance net profitability among its full-first half results which saw a strong turnaround to a €1.8 million group profit, from a loss of €9.0 million a year earlier, supported by an improvement in all sectors of the business. EBIT rose to €8.7 million from €8.6 million in the first half of 2004. EBITDA was €14.1 million against €8.6 million, and sales were €126.7 million against €113.4 million, it said. “The results in the first half are in line with the targets set in the three year business plan 2004–2006, and show a clear improvement in profitability in all the business units,” Stefanel commented.
THE MOODIE REPORT
NEWS – LANDLORDS & RETAILERS
AUSTRALIA.
One of the great names – and pioneering forces – of Australian duty free, James Richardson, is returning to the business later this year. James Richardson sold its Australian duty free operation, including 23 offairport shops (City International Duty Free) to Swissair, in 1995. That acquisition, together with the 1995 purchase of Downtown Duty Free and in 1996 Allders International, formed the basis of The Nuance Group, which was in turn sold to Stefanel and Gruppo PAM in 2002. Since divesting its Australian operations in 1995, James Richardson has focused its duty free activities on its operation at Tel Aviv Ben Gurion Airport in Israel, including the acclaimed new Ben Gurion 2000 terminal three. James Richardson Corp also has a highly-successful business in Australia covering sectors as diverse as furniture and textiles. Now it is returning to its duty free roots. JR Duty Free Division Executive Chairman Garry Stock told The Moodie Report this week: “I can confirm that we are returning to the sector. We will open three stores by year-end – one in Perth, one in Adelaide and one in Melbourne. Our interests though are wider than just the off-airport business. We will be examining any airport opportunities that come up in Australia and New Zealand.” Stock said that the off-airport business, besides being a viable business in its own right, would help James Richardson create the infrastructure for any airport operations, giving “a sense of comfort” to airport management considering the company as a partner. James Richardson, under the leadership of one of Australia’s most respected businessmen, Chairman David Mandie (OBE, FAIM) first entered Australian duty free in 1972 at Brisbane Airport. Under his leadership the company became one of the global industry’s leading The James Richardson duty free story 1892: Founded by hotelier Jimmy Richardson 1953: Wholesale wines and spirits business was acquired by present owner David Mandie (OBE, FAIM) 1955: Merger of James Richardson and the Mandie tobacco businesses into Melbourne's leading tobacco, wines and spirits distributor 1972: Entry into duty free retailing at Brisbane Airport 1972: Commenced distribution of perfumes and cosmetics to Australian retail market 1972–1995: Expansion into on- and off-airport duty free retailing including Sydney, Brisbane, Melbourne, Perth and Cairns airports and internationally at Ben Gurion Airport, Israel 1995: Sold Australian duty free operation including 23 off-airport shops (City International Duty Free) to Swissair 2005: Announces come-back to Australasian business; appears as one of the parties interested in Wellington International Airport duty free contract
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players over the next quarter of a century. Garry Stock said the company understood that off-airport conditions had changed significantly since 1995 but said the sector still offered good potential. He said suppliers had welcomed the company’s come-back. “Yes, the sector has changed, but we’ve had encouraging support from the suppliers that there is a job to be done,” he said. “We realise we can’t just walk back in and turn on the light. There are new circumstances and we will have to adapt.” He declined to comment on which airports will be targeted. However Sydney International Airport may loom large as the duty free concession, currently held by The Nuance Group, is likely to go to open tender next year. All three downtown stores will be located in buildings formerly occupied by James Richardson’s duty free operation: 185 Swanston Street Melbourne (presently occupied and leased by Nuance-owned Downtown Duty Free); 772 Hay Street in Perth, currently the site of Downtown Duty Free’s largest store in the West Australian capital; and King William Street in Adelaide. James Richardson’s re-emergence means Nuance will be vacating the Melbourne and Perth premises. The Moodie Report understands that Nuance is effectively pulling out of the Australian downtown (off-airport) sector as leases expire – unless a downtown store is required under the terms of an airport contract. However it may extend its Adelaide downtown lease, having lost the airport contract to Duty Free Stores Wellington (Duty Free Stores New Zealand) for the new terminal that opens next month. Downtown conditions have changed radically since the mid-1990s. The sector probably accounted for 50% of the Australian market a decade ago, but for big airport retailers such as Nuance the airport business now accounts for the overwhelming majority of sales. Noted one retailer: “The off-airport duty free trade in Australia is languishing at the moment, and I doubt if it will get much better. It is an entirely different game now from when James Richardson sold out. There has been a steady decline in trade since GST was introduced and – with increased competition from the domestic market, aggressive airport shops, a high value Australian Dollar affecting inbound purchases, and lower duties and taxes on goods – it’s tough out here.” Noted another rival: “This [ JR’s downtown initiative] is clearly a positioning statement by them prior to bidding for any airport contracts that come up in Australia in the next couple of years. They can claim to be an Australian operator but also draw on their Tel Aviv critical mass.
AUSTRALIA.
A factory outlet planned for Brisbane Airport is due to open in the first week of September. The A$25 million (US$19 million) Direct Factory Outlet (DFO) warehouse is located at the entrance to Brisbane Airport, on 1 Airport Drive, about 3km from the international terminal. It will house 120 tenants, including popular brands including Sheridan, Colorado, Quiksilver, Sportscraft, David Lawrence, Jag, Witchery and Country Road. The stores will sell discounted lines, previous season’s stock or seconds. DFO has similar outlets at Moorabbin Airport, Homebush and proposed outlets in Melbourne’s Spencer St and Essendon. Brisbane Airport Corporation is planning to develop 1,000 hectares of land into seven precincts over the next 20 years. The 90-hectare 1 Airport Drive development will house commercial, retail and office space at an estimated cost of A$200 million.
DENMARK. The opening of the first-ever Anthon Berg airport shop by The Nuance Group in Copenhagen is an important statement of faith in the confectionery category, according to the retailer. The Toms-owned Danish confectionery brand is featured in a 20sq m shopin-shop at the revamped Copenhagen Tax-Free Shop. The Nuance Group Denmark’s outgoing Managing Director Stephan Salvisberg told The Moodie Report: “Confectionery is the backbone of the store and the local statement is also very important for us, it’s not just about the international brands.”
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Thursday 18 August 2005
The store offers both pre-packed and loose chocolates which can be hand-picked by customers. These are then assembled into individual gift boxes designed for the Nuance store. Irina Sandberg, International Marketing Manager for Toms, told The Moodie Report: “Hand-picked chocolate has been a longstanding tradition in Belgium and in Denmark it became a trend about five years ago. Half of the passengers here are Danish so it appeals to them but it’s also attractive to other nationalities for gifting – we see Japanese and Chinese, for example, coming in to buy something special from Denmark.”
Nuance’s Stephan Salvisberg (with Corporate Communications Anette Thisgaard, International Marketing Director Manager Ulrike Janett-Bachner): “The local statement is very for Toms, told The Moodie Report: “This new openimportant for us, it’s not just about the international brands.”
ing has played an important role in the whole revitalisation of the Anthon Berg brand. It supports it so well – it is such a quality statement to have a shop like this.” For full story and pictures see www.TheMoodieReport.com
EGYPT. Aer Rianta International–Middle East (ARI-ME) is poised to open its new 2,000sq m post-arrivals duty free shop at the City Stars Retail & Entertainment Complex in Cairo’s Heliopolis area. The opening is an integral element of the retailer’s management consultancy contract to run duty free shops jointly with Egyptair Duty Free Shops. The partnership was formed last year. ARI-ME Managing Director John Sutcliffe told The Moodie Report that the store is being stocked while the final customised units are shipped in. The opening is “imminent”, he said. The store is part of Egypt’s largest shopping mall and will be “easily the largest duty free shop in the country” said Sutcliffe. Because of the complexities involved in getting personalised units through Customs, Sutcliffe said the “maturing period” of the new store would be longer than usual. “Normally we would allow two to three months – in this case it is likely to be six to nine months,” he said. “We’re delighted with the store, which will be the best-fixtured duty free shop in Egypt. We see it as a new benchmark for the country.” Sutcliffe told The Moodie Report that there had been no noticeable decline in traffic levels to Egypt since the July terrorist attacks in Sharm el-Sheik. The tourism trade has worked hard together with the airline business to offset any potential decline through a flurry of price-driven offers and heavy marketing.
INDIA. Flemingo International has won the rights to operate a duty free shop at Mumbai Port’s cruise terminal, according to Hindu Business Line. Quoting a port official, the report said the new store is part of integrated facilities being created to place the recently-built cruise terminal on a par with those in developed countries. The official said that Flemingo, a UAE-headquartered international duty free chain that runs duty free outlets at Chennai and Goa ports, was selected after an open tender. Flemingo also operates duty free outlets at several international airports in India. The port authorities are trying to develop Mumbai, traditionally a cargo port, as a major link in international cruise shipping. Gautham Day – the Senior Docks Manger who is in charge of the cruise terminal – told Hindu Business Line: “We want to ensure that the terminal has all facilities for international tourists.” The duty free shop is expected to commence operations by October, according to Flemingo India Director Atul Ahuja. “We expect better sales at the Mumbai sea terminal than at Chennai and Goa,” he said. Besides cruise passengers, a large number of foreign crew arrive at Mumbai port. Ahuja said Flemingo had also received permission to start duty free shops at Vizag and Haldia.
NEW ZEALAND. Wellington International Airport says it has attracted an encouraging response to its recent Expression of Interest for Duty Free at the capital city’s gateway. As previously reported, the privately-owned airport company is seeking expressions of interest for a two-stage proposal as follows: ■ Stage 1: From early- to mid-2007, to 30 June 2009. The new duty free operator will trade alongside the existing operator [Duty Free Stores New Zealand] from temporary premises. ■ Stage 2: From 30 June 2009 to June 2014, in enlarged store premises, when the appointee will become the exclusive duty free operator at the airport.
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Thursday 18 August 2005
Retail and Development Manager Katy Ellis told The Moodie Report this week that response had been “excellent”, adding: “We have since issued tender documents to the interested parties, with 14 October as the deadline for submission. The following companies are involved at this stage: Duty Free Stores New Zealand, Nuance, DFS, King Power (Hong Kong), JR Duty Free, Aelia and Australian Way.” That’s a strong line-up of Asia Pacific’s main players, France’s ambitious Aelia and JR Duty Free, owned by James Richardson – until 1995 a powerhouse of Australian duty free. Ellis said the company hopes to announce the successful bidder at the beginning of next year.
SENEGAL. Saresco Afrique is undertaking a major extension of its Dakar Duty Free Shop to bring it up to international standards.The renovation of l’Archipel Dakar will allow for a 240sq m shop and a 450sq m Customs warehouse. The revamp is in response to the growing number of tourists using Dakar Airport; some 1.7 million passengers are expected in 2005. “We intend to become one of the more modern duty free shops of Africa, comparable to international standards,” said Saresco Afrique Buying Manager Caroline Langlais. The redesign is being undertaken by Umdasch Company, the specialist travel retail store design firm. “We have decided to devote most of the shop extension to perfumes and cosmetics in order to respond to our customers’ growing demand,” said Langlais. “We will now have 38 wall units (of four racks each, back-lighted and with a light-box) and 24 units on central gondolas. Some 28m of windows will highlight our shop’s frontage after passengers pass through the security controls.” Langlais asked suppliers to contact the company by the beginning of September to choose their future sites. For details, contact Claude Bénitah or Caroline Langlais at Saresco Afrique, 13 rue de Monceau, 75008 Paris, France. Tel: +33 1 56 88 33 35, fax: +33 1 56 88 33 37.
SOUTH KOREA.
Seoul Incheon Airport has opened a shopping mall and theme park rolled into one. The Air Joy shopping mall occupies over 16 acres (6.5ha) and is made up of three floors underground and nine above. Local supermarket chain E-Mart was the first to open an outlet during the initial opening in April, followed by a grand opening of all floors in June. The airport authority said Air Joy aspired to be among the world’s first “Shoppertainment Malls”, where residents from the Incheon area and international travellers are given “a feast for the eyes, a gamut of entertainment and things to enjoy, as they look and browse for their favourite shopping items”. Highlights include four themed areas. The World Star Museum, dubbed the airport’s answer to Madame Tussaud’s, features wax likenesses of 41 celebrities including David Beckham, Madonna, Asia’s superstar Bae Yong-joon and Park Chan-ho. The Toy Story 3 area displays toys such as robots that climb walls and a collection of 1,000 Smurfs. Memory Lane is an area where people can experience life as it was in Korea from the 1950s to the 1970s. It features make-believe comic book shops, coffee shops with coal stoves, rice mills and small shops; visitors can buy traditional snacks and play games. The Atrium is a multi-storey viewing area constructed in an open-space arrangement equipped with see-through elevators. Here audiences can view performances on the first floor from terraces above.
USA.
On Wednesday Houston’s City Council finally approved the award of the duty free contract at Houston George Bush Intercontinental Airport to The Nuance Group Houston. Nuance received an overwhelming endorsement from the Council with a 12 to 2 vote in its favour. As reported, in January Nuance was selected to enter into negotiations for the duty free concession covering terminals A, B, C and D, previously operated by Dufry Americas with local partners. The base term is five years, with three optional one-year extensions. Nuance North America Vice-President of Business Development John Menchella told The Moodie Report: “We plan to take over the stores as soon as possible. Our store development planning was initiated several months ago. Now that the contract has been awarded the exact timing is dependent primarily on regulatory processing. We are excited about the opportunity in Houston as we feel there is great potential to improve the business.” The Nuance Group North America CEO Dick Rendek commented: “In the past year we have been refining our plans for targeting US tender opportunities. Winning the Houston tender shows we are on the right track with our approach and are poised for US expansion in the near future.”
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Thursday 18 August 2005
The awarding of the contract had been delayed, partly due to a pending lawsuit against the City of Houston by a former concessionaire Branch/McGowen Ventures (a DBE partner of Dufry). Dufry is not a party to the lawsuit. Branch/McGowen is a partnership comprising ex-Houston City council member Ernest McGowen Snr and local fastfood franchisee Theldon Branch. According to Houston Business Journal the lawsuit accuses the city and the Houston Airport System of fraud and breach of contract. The nub of the dispute is that Branch/McGowen claims it invested US$500,000 in retail improvements on the basis that it was led to believe its contract would be renewed. Shortly after much of that investment was raised, it contends, airport officials put the business out to tender. The city flatly rejects the charge. The partnership had operated at the airport since 1995. The Nuance Group’s concessions will cover a total area of 550sq m (5,900sq ft). Houston is the third US airport in the Nuance network, alongside Denver and Las Vegas. The main store in Terminal D will provide the full line of merchandise including liquor, tobacco, cosmetics, fragrance, confectionery, food, souvenir apparel, souvenir food, souvenir hard goods and technology. The smaller Terminal D store will feature fashion, leather goods, accessories, luxury and fashion timepieces, jewellery and sunglasses as well as a range of top-selling fragrances. Two kiosks, located in Terminals A and B, will complement these main stores with an offer of liquor, tobacco, top-selling fragrances, fragrance and cosmetic value sets, confectionery and technology. Last year the airport posted record international passenger numbers. Nearly 6.4 million international passengers used Bush Intercontinental in 2004, beating the previous high of 5.6 million set in 2000. Bush Intercontinental set records to domestic and Mexican destinations in 2004. More than 30.1 million domestic passengers passed through the airport in 2004, shattering the old record of 29.5 million, while 2.6 million travelled to and from Mexico to surpass the previous high of 2.2 million.
THE MOODIE REPORT
GENERAL NEWS
ESTONIA.
Leading Baltic ferry operator Tallink has reached an agreement with two shipbuilders for state-of-the-art ferries. The first deal, with Italian shipbuilder Fincantieri, is for a new-generation, high-performance, ice-class cruise ferry, with an option on a second. The ship will be 36,000 gross tonnes, with capacity for 2,000 passengers and 200 cabins. The second deal, with Aker Yards of Finland, is for a €110 million fast passenger ferry for delivery in spring 2007. The contract includes an option for another similar vessel. This ferry is to a new, innovative design, according to Tallink. She will start regular traffic between Helsinki and Tallinn and will be capable of crossing between the two cities in an hour and 50 minutes. The ice class of the ferry will allow year-around operation. Aker Yards is currently building another new-generation cruise ferry to be delivered for Tallink in spring 2006. Tallink Group is the biggest shipping company in Estonia. It is the clear market leader in passenger transport between Estonia and Finland and between Estonia and Sweden. During the latest financial year, Tallink’s turnover was €218 million with 2.8 million passengers transported. Tallink has 12 vessels in service.
THAILAND. Local people and foreign tourists who support Tsunami-hit provinces are to be given the opportunity to buy duty free goods in domestic stores. Between October and March foreign tourists will, for the first time, be able to buy duty free items when shopping outside Phuket Airport. Deputy Finance Minister Varathep Ratanakorn said the Customs Department had approved duty free shopping for travellers to the area. The authorities are trying to revive interest in travelling to the Andaman Coast following a sharp drop in tourism; in the first half of 2005 just over five million tourists visited the area, compared with the annual target of 13.4 million. Foreign tourists will be able to go duty free shopping in a special plaza in Phuket, but locals will be allowed to buy such items in all six provinces – Phuket, Krabi, Phang Nga, Satun, Ranong and Trang. Foreign tourists will be able to buy duty free products by showing their passports. Local tourists have to show evidence of a hotel booking or travel document before purchasing. In a related development, Thai-French joint venture Siam Sawasdee Co has announced Phuket’s first duty free shop. Sawasdee Duty Free Plaza, located near Saphan Hin, is due to open in December. Managing Director Weeravit Lew said the firm had invested more than Bt400 million (US$9.7 million) in the outlet. The plaza will feature international brands, fashion items, leathergoods, cosmetics, electronics and consumer
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The Moodie Report
Thursday 18 August 2005
technology, and aims to cater to all tourists. The firm expects sales of Bt600 million (US$14.5 million) in its first year. The company plans to open five stores throughout the country in the next three years. Target areas include Siam Centre and business districts in Bangkok, Pattaya, Chiang Mai and Samui. Each branch would require an investment of Bt200 million, said Weeravit.
THAILAND. The new Bangkok Suvarnabhumi International Airport should begin operations in June next year – nine months behind schedule, Deputy Transport Minister General Chaiyanan Charoensiri has told Thai newspaper The Nation. The Deputy Minister said June was “a preliminary assumption” after discussions were held with the authorities in charge of construction. Suvarnabhumi was originally scheduled to open on 28 September. The exact opening date should be known after that date. Airports of Thailand Senior Executive Vice-President Somchai Sawasdeepon said the airport is now more than 90% complete. He expects the terminal building to be completed in December, and then AOT’s subsidiary New Bangkok International Airport can allow other contractors to begin the interior decoration and installation of the airport information management system. He added that those jobs should take another three to five months. He said other contractors, including duty free retailer King Power, would start work as soon as they are allowed to enter the terminal.
THE MOODIE REPORT
PEOPLE, EVENTS & NOTICES
INTERNATIONAL.
Macquarie Airports CEO Kerrie Mather will deliver a major presentation on the role of airport retail at next month’s Trinity Forum in London. “We have a number of exciting retail projects under way at our airports at the moment, and I thought it would be useful to talk about these,” she told The Moodie Report. Her address will be called “Unlocking the value of airport retail – the airport investor’s perspective”. In further additions to the programme, a ‘Trinity’ panel in which leading suppliers, airports and retailers debate key issues is being joined by David King, Managing Director of Alpha Airport Shopping and Executive Director of Alpha Airports Group, and Patrick Moran, Vice President, Director of Global Duty Free, Brown-Forman Beverages, who played a key role in the formulation of the ‘White Paper’ which was developed out of the first Trinity Forum. A number of airport companies have recently confirmed their attendance including Amsterdam Airport Schiphol, Auckland International, BAA, Hong Kong International, Fraport, Lima, Vancouver, Aer Rianta, Aeropuertos Argentinas 2000, Munich and Unique Airport Zürich. Most of the industry’s leading concessionaires are attending. To register, please log onto www.tfwa.com and click on the Trinity Forum icon.
SOUTH AMERICA.
About 200 delegates are expected to attend this year’s ASUTIL conference, which will mark the tenth anniversary of the South American trade association. Co-organiser Raven Fox said the latest high-profile speaker to join this year’s agenda is Santiago International Airport CEO Carlos Plass. Plass will present plans for Santiago’s commercial development and share his views on the future of South American aviation. After the conference ASUTIL will treat delegates to a day in the 17th century Uruguayan town of Colonia del Sacramento, a UNESCO World Heritage Site. For full details contact Rossella Golluscio on
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Martin Moodie, Editor The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to
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