International Airport has reported a retail revenue increase of 12.7% to A$331.m ($260m) in its full year 2017 results.
The strong retail performance reflected the Terminal One International luxury precinct’s (which offers luxury lifestyle speciality retail concepts) first full year of operations and completion of the new Marketplace area and Domestic food court.
The consistent performance of the airport’s domestic terminals was also a factor. The transformation of Domestic Terminal Two continued in 2017 with first to Australia concepts and a mix of local and international brands including Desigual and Joe & The Juice.
In 2017, the airport handled 43.3m passengers, up 3.6% from 2016. This is due to the fact it has has “successfully competed internationally to attract airlines and grow inbound tourism.”
Overall revenue increased 8.7% from 2016 to A$1.5bn while EBITDA was A$1.2bn, a rise of 8.3% on the previous year.
RETAIL PERFORMANCE
Retail as a business contributed 23% of total group revenue in the period with duty free delivering strong growth. The standout core category performers were liquor, perfume and cosmetics. Currently, the airport has 244 retail outlets, 127 in Terminal One, 65 in Terminal Two and 52 in Terminal Three.
In addition, all three terminals were fully leased with continued strong retailer demand for space. According to the airport, the retail offering is delivering a superior passenger experience with continued focus on value, range and choice. The is proven via strong retail sales, passenger satisfaction scores and “positive sentiment.”
The airport is focusing on providing high quality retail space in shopping areas and creating an “exciting and vibrant” retail environment. It is also continuing to develop a product and merchandise mix to meet the retail experiences of passengers and to identify appropriate retailers who can meet the airport’s service, operational and financial objectives. Enhancing its understanding of customer trends and behaviour is also a priority.
Reflecting on the airport’s retail transformation, a statement in its annual 2017 results presentation said: “We’re proud to offer our customers more choice and value with the best of global, local, luxury and high street brands as part of our world-class shopping and dining offering.
“The completion of our Terminal One International luxury fashion precinct [tailored to meet a diverse international passenger base] was a major milestone in our retail transformation this year. The precinct continued to perform strongly as passengers responded to a retail offering tailored to meet the unique needs of our 16.0 million international travellers.
“Swiss watchmaker Rolex and Gucci completed the precinct, complementing a streetscape of global designer brands to suit all tastes, including Tumi, Michael Kors, Kate Spade New York, Hugo Boss, Emporio Armani, Tiffany & Co., Hermès, Burberry, Max Mara and Coach.”
STRONG DUTY FREE OFFERING
Heinemann Tax & Duty Free, which won the Sydney duty free contract in 2014 and operates the world’s largest standalone airport duty free, spanning 5,750sq m continued delivering a “strong contemporary offering” across its core products of liquor, skincare and fragrance.
“Exclusive limited editions created a unique value proposition for international travellers,” the airport said.
The travel essentials and Australian experience categories also continued to perform well, with larger store footprints proving successful following a number of openings.”
CEO Geoff Culbert, who replaced former CEO and Managing Director Kerrie Mather in January after the former retired said: “2017 was an excellent year for the airport in which we welcomed a record 43.3m passengers. This increase of 3.6% was driven primarily by strong international passenger growth resulting from increases in airline seat capacity and load factors. We also continued to expand the number of direct services and frequencies from a wide range of destinations.
“Highlights for the year include solid growth in aviation services, resulting in part from successful and proactive marketing initiatives and long-term collaboration with tourism partners.”
He concluded: “We are looking ahead to another year of opportunity for our industry. We are committed to the successful operation of Sydney Airport as a dynamic and diverse business that benefits our customers, investors, community and broader stakeholders, now and for the long term.”
