Building a Resilient, Sustainable FUTURE

(A PANEL AT SUMMIT OF THE AMERICAS CO-ORGANIZED BY THE MOODIE DAVITT REPORT AND ARRA)
 
With Panelists
Jim DeCock, AirProjects
Matthew Greenbaum, International Shoppes
Erasmo Orillac, Motta Internacional
Andrew Weddig, Airport Restaurant & Retail Association
 
Moderated By
Dermot Davitt, The Moodie Davitt Report
 
This panel revisited the theme we first explored at Summit of the Americas last year: recovery toward a “new normal” for airport concessions. This year, we updated the state of the recovery, topics that our industry has addressed over the past year, and the many topics that remain to be resolved. Although our industry is much improved from one year ago, we cannot overlook the impact of the pandemic: air travel has widely recovered to 2019 levels, but that is still more than 10% below where we expected to be in 2023. And the people who did not travel during the three years of the pandemic – nearly 1.3 billion travelers in the U.S. alone – and their purchases are lost forever.
 
This is the magnitude of the recovery our industry faces. And we need change. Quoting Dermot in his introduction, “We know that even with traffic recovering, many airport concessionaires have a long way to go before they recover. The pandemic exposed fractures in the business model that were just below the surface pre-crisis. And it is clear that the travel retail industry won’t bounce back until we collectively evolve the business model.”
 
Our panel of industry veterans addressed the challenge head-on, discussing the recovery curve, a changing customer base, operational headwinds, and airport relations. Here are three key takeaways:

• The industry’s immediate, critical challenges are moderating. The labor market is easing, the supply chain is improving, but costs are substantially higher. Both Erasmo and Matthew reported costs per employee have increased more than 10%. Other costs are going up as well so we’re getting squeezed. We will need to be very cost-conscious for the next two to three years to sustain a recovery.

 

• Matthew observed we are in a better place, there is a greater level of optimism in the industry. 2022 was a year of re-set and now almost everything is hinting at recovery, except for the passenger mix. There are fewer business travelers, fewer Chinese nationals – both groups disproportionately contributed to duty free sales pre-Covid. Nonetheless, Erasmo says spend per transaction is up 4%-5%.

 

• Covid brought a closer partnership among airports, airlines, and concessionaires: all sides are open to new ideas and better partnerships. Jim added his observation that partnerships are less adversarial and more open. Andy concluded there’s a heightened recognition that this is an overarching partnership, that airports, concessionaires, and brands have the same goal, which is to serve the traveling public, to provide great customer service, to enhance the passenger journey.

 
These are just three important takeaways. Our panel offered many more profound insights and bold ideas. We encourage you to read Moodie Davitt’s extensive special report on the session, “Striving for balance in the airport concessions business” here.