Page 1. WELCOME to The Moodie Report 7 Days. Days. The Week in Travel Retail. Image of the Week. Issue 404 FAST, FACTUAL, FREE

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1 Issue 404 The Week in Travel Retail Days FRIDAY SATURDAY SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY 28 JULY 2011 WELCOME to The Moodie Report 7 Days. This is our 404th and last edition, writes Martin Moodie. After a fortnight s break, we return on Thursday 11 August with an exciting new product and a first for the travel retail industry The Moodie Report e-zine. The e-zine will feature original content to more strongly differentiate it from our website s intensive daily coverage of the industry and our weekly html newsletter. It will also include dynamic and interactive advertising, allowing our business partners to showcase their brands in extraordinary ways simply not possible with traditional print media or with our existing PDF format. For example, advertisers will be able to use video, audio and moving images or traditional full-page visuals all linked to their respective websites. As with 7 Days, we ll feature a summary of the week s biggest stories (albeit in a different, tighter format) but there will also be a host of new and innovative features plus insights from our new Moodie Research division. The way we were: The Moodie Report s front page from 16 September 2002 More of that soon. First it s appropriate to look back over nine years, 404 issues and around 2 million words. When we launched 7 Days at 3.22pm on Monday 16 September both the publishing world and the travel retail channel were very different places. Media was dominated by subscriptioncharging magazines and digital titles were in their infancy. The Internet was barely used by trade media or by industry executives. The Moodie Report, published free of charge (as it remains today), was to drive a digital revolution, launching a website of the same name six months later. continued Travel retail s ultimate marathon man, Dubai Duty Free s newly promoted Vice President of Operations Sean Staunton, this month completed one of the industry s truly great feats in the cause of corporate social responsibility. Sean set out to run four marathons across Image of the Week four continents in four months, to raise funds for travel retail industry charity Hand in Hand for Haiti (whose school opens this September). Previously, he had run the Barcelona, Borneo and Kenyan marathons. On 17 July Sean completed the quartet, crossing the finishing line in Rio de Janeiro. During that epic journey he raised a remarkable US$11,070 for the young, needy children of Haiti. FAST, FACTUAL, FREE QUOTES OF THE WEEK We re targeting +24% growth in the business this year so these moves will be important in driving footfall and conversion. Qatar Duty Free Senior Vice President Keith Hunter says the retailer s plans to expand space at its main Doha Airport Departures store will lift the fast-growing operation to new heights. We approach the second half of the year with confidence and [will] pursue further market share gains in our historical markets as well as in high-potential emerging markets. LVMH Chairman and CEO Bernard Arnault hails a strong first half for the luxury goods group, led by a stellar performance from the Selective Retailing division, which includes DFS and Starboard Cruise Services. As Europe s third-largest lowcost carrier, Vueling very much complements our current portfolio of airline partners and introduces new dynamics to our business. Tourvest Duty Free CEO Selwyn Grimsley on the concessionaire s new inflight contract with Spainbased carrier Vueling a move that strengthens Tourvest s ambitions to become a global inflight player. Page 1

2 Lancaster Group (now Coty): Our first advertiser back in the 12 November 2002 edition Back then we carried no advertising (our pioneering brand partners Lancaster (now Coty) and Swatch Group didn t come onboard until our 12 November edition) and the look (pictured) was basic to say the least. And what of the industry stories of the time? Here s a flavour: No question about it, war is in the air and many travel retailers are preparing for yet another drastic downturn in business. The reference was to the second Gulf War, which duly began in Iraq within weeks. We also reported how LVMH s Selective Retailing division had reduced its six-month losses to 39 million (from 105 million in 2001) compare that with this week s outstanding results when the division posted organic growth of +18% year-on-year with a +63% increase in profit from recurring operations. In our first issue LVMH Chairman Bernard Arnault said that DFS was striving to break even by the year-end, despite being handicapped by a weak Yen that stood at 120 to the US Dollar. Today DFS is booming (see results on page 8), buoyed by a Yen that stands, remarkably, at 78 to the Dollar and a thriving business with mainland Chinese travellers that was still in its relative infancy back in Imagine how a Japanese crisis such as that caused this year by the March earthquake and tsunami would have devastated DFS back in To the eternal credit of Chairman and CEO Ed Brennan, who took the far-sighted decision back in 2003 to relocate the company s executive HQ to Hong Kong to be closer to the China market, the retailer has not only ridden out this year s storm but flourished in the face of it. Much has changed, both in terms of our industry and how we communicate with it. As we move towards our tenth anniversary in 2012, we say goodbye to The Moodie Report PDF and welcome The Moodie Report e-zine. Autogrill Group s announcement today that it has refinanced a sizeable portion of its consolidated debt through 1.35 billion worth of credit facilities has big ramifications for the travel retail and food & beverage sectors. The Italian group owns two of the world s leading travel retailers (now integrated) in Aldeasa and WDF (which collectively embrace the former Alpha Airports Group s travel retail interests) as well as food & beverage giant HMSHost. The key to the importance of the move came at the end of the press release as Autogrill noted that it does not expect to draw down the two credit facilities entirely, leaving committed medium long-term credit lines available for future utilisation to support growth opportunities and seasonal business trends. This is a statement of intent. In a telling conclusion that spells out Autogrill s aspirations, the company said: The new financing, allowing margins of flexibility and financial covenants in line with those of the cancelled credit lines, ensures adequate financial support for the Group, thus allowing it to pursue growth strategies in both business areas. The group has undoubtedly been restricted by its debt constraints in recent times, which has resulted in a relatively conservative approach while most focus was placed on the bedding-in of the WDF and Alpha acquisitions. Today s news seems to augur a more aggressive approach, possibly bringing further acquisitions into play, as well as the ability to compete aggressively in forthcoming major airport tenders, plus continued heavy investment in existing operations. Serious observers of the sector believe much more consolidation of the travel retail sector lies ahead. Autogrill is clearly set to play its part in the process. Moodie Interactive: Click for the advertiser s website Page 2

3 BUSINESS NEWS CHINA. Xi an Xianyang International Airport has unveiled ambitious commercial plans for its new Terminal 3, which will feature 88 units across 11,400sq m of space. The new facility is scheduled to open in March It will handle 22 million domestic passengers, with China Eastern and China Southern the leading carriers. In 2009 UK-based The Design Solution was appointed to carry out the overall commercial planning for the facility. In 2010 this appointment was extended to include the detailed design of the main commercial areas. According to The Design Solution and Fraport, which manages the airport (and owns a 24.5% share in the business), Xi an will set new standards in China in terms of planning and design of the commercial areas within a major terminal complex, and in delivering a best-of-class retail mix to its customers. A central security zone will be located after check-in, followed by a 60m wide bridge taking passengers into the main departures area. At this point the bridge overlooks the central commercial lounge about 10m below. Passengers will have a panoramic view of all the commercial space before travelling by lifts and escalators to the main Departures level. The main retail area will be developed in two phases. The first phase is planned to open in March 2012 and the second phase about two years later. In the first phase there will be a central seating area with retail located to the north and anchored by major food & beverage outlets. Kiosk retailing and small food & beverage outlets will be integrated within the seating area. The second phase will extend this section of the terminal building on two levels, adding retail along the southern apron façade, with food & beverage facilities located on a mezzanine above. For more on the plans for Xi an Xianyang International Airport go to IRELAND. Dublin Airport Authority (DAA) last week welcomed Dr Quirkey s 4DFX Motion Theatre and family fun centre to Terminal 1 a first for Dublin Airport. Designed and built in Ireland, the 18-seater 4DFX motion theatre pod was created specifically for Dublin Airport. It is described as the most realistic theatre experience adventure with its 4D movies, complete with smoke, fog, simulated flame, snow and water. Visitors will be left bursting with adrenaline ahead of their holiday as they dodge falling boulders, battle aliens or get rocked around in a runaway train, DAA said. Moodie Interactive: Click for the advertiser s website Page 3

4 Richard Quirke, owner of Dr Quirkey s Good Time Emporium, said: We are delighted to install the first 4DFX Motion Theatre in Dublin Airport and to be providing families with safe and exciting entertainment before they embark on their holidays. Mark Banchansky, Head of Retail Concessions Ireland at The Loop (Dublin Airport s retail brand), said: The launch of Dr Quirkey s 4DFX at The Loop further enhances our aim to provide quality retailing, entertainment and food & beverage for our customers. We have no doubt the Movie Theatre and Family Play Centre will quickly become a firm favourite for our young (or not so young) passengers. The Family Play Centre includes Teken 6, Sega Rally, air hockey, dance and basketball games. Situated in The Loop shopping street in T1, at the start of the link corridor to T2, the centre also provides snacks and refreshments. The 4DFX Motion Theatre costs 5 per ride. QATAR. Qatar Duty Free has embarked on a major project to extend space in its main Doha International Airport Departures store, which will add 15 20% more retail space, and greatly benefit some of the retailer s key product categories. The company is moving back several walls in the store, notably those in the key liquor and confectionery & food zones, as well as in fragrances & cosmetics. It is also adding a second store entrance to improve access for passengers in transit and those coming from the newly opened Terminal B check-in areas. Qatar Duty Free Senior Vice President Keith Hunter told The Moodie Report: The main categories to benefit will be liquor and confectionery & food, plus P&C. Apart from the increased space in liquor and confectionery, the changes will improve the customer flow, with a bank of tills that are currently by the walls moving further forward into the store. At the other end, which houses P&C, we ll open a second entrance and make it easier for transit and Terminal B passengers to enter the store. Also in the main store the space for watches will be doubled, and electronics will be relocated to a new area upstairs on the mezzanine level, which houses most of the departure gates. Hunter added: We are placing a big emphasis on watches & jewellery in this project. It s around 10% of sales, but it s growing very quickly. We are seeing more and more Chinese and Russians coming through, amid the expansion of Qatar Airways. So to help us meet that demand we are doubling the size of the watches area in the middle of the store, and creating a new watch counter. On the mezzanine a new Express store will also open, hosting many best-selling brands from the core categories. The existing Qatar Duty Free store upstairs, which until now has sold mainly souvenirs, gifts, news & books, will be redesigned and the mix changed so it carries more of a core travel retail offer. Hunter said: We re targeting +24% growth in the business this year [after +20% last financial year Ed] so these moves will be important in driving footfall and conversion. For further details on this and other Qatar Duty Free initiatives, go to SPAIN. Aldeasa WDF has opened a new 1,400sq m store in the recently refurbished commercial area in Pier C at Palma de Mallorca Airport. The store is open-plan, without walls, making it easier to enter the store while bringing the products closer to the passengers, the retailer said. The terminal is the regional hub for Air Berlin. Beauty and liquor are among the key categories that enjoy strong displays in the store, said Aldeasa WDF. The fragrances section includes custom-tailored fixtures, so suppliers can display their products using their own commercial design and image, and customers can quickly and easily locate their favourite brand, improving the shopping experience, said the company in a statement. Moodie Interactive: Click for the advertiser s website Page 4

5 Another important range of products is the beverage section, including a tasting bar, where international brands [can] organise tasting events and product launches. Thinking Mallorca is the destination merchandise section, featuring strong local and regional representation. Aldeasa Regional Director for the Balearic Islands Rosa Gallagher said the new store is a modern and innovative establishment in line with the terminal s new commercial area. It s a completely open store that invites passengers to come in, offering them a pleasant shopping experience that will be the perfect ending to their visit to the island. For more details and pictures go to UK. LS Travel Retail UK & Ireland has opened a new 75sq m gift and souvenir store at Glasgow Airport, trading under the group s Discover brand. It is the company s first store under the Discover fascia in the UK. The store is said to be a showcase for Scotland, and will appeal to tourists looking for Scottish souvenirs, as well as departing UK nationals seeking a gift with a Scottish twist, said the retailer. The product range includes arts and crafts, apparel and accessories, confectionery and gourmet food, toys, jewellery and sporting memorabilia. Glasgow Airport Commercial Director Francois Bourienne said: We are delighted to welcome LS Travel Retail UK & Ireland and its Discover brand to Glasgow Airport, and are absolutely thrilled that Glasgow is the first Discover branded store in the UK for this experienced international travel retailer. LS Travel Retail UK & Ireland Managing Director Fin Casey said: The store evokes the heritage of Glasgow in its design, and delivers a real sense of the city and the country in the carefully selected product offer, showcasing both established and emerging Scottish talent. Moodie Interactive: Click for the advertiser s website Page 5

6 TENDER & CONTRACT NEWS AUSTRALIA. Westralia Airports Corporation, the owner of Perth Airport, is seeking proposals from concessionaires to operate a high quality speciality retail outlet in the International Terminal (T1). The use of the outlet is proposed to be, but not limited to, travel accessories, fashion accessories, travel pharmacy concept, children s travel/toys/clothing, confectionery/chocolate. The airport company said it is looking to partner with established brands that represent quality and value and have a key focus on customer service. It commented: This is an exciting and rare opportunity for brands to grow their business in a high-traffic, fast-paced environment while developing a strong partnership with the airport. The speciality retail opportunity is located on the first floor of the International Terminal, before passenger entry to the secure Customs Area and Departure Lounge. Key features of the location include easy access for family and friends, 100% footfall from departing passengers, and easy access to airport staff. Concessionaires interested in submitting a proposal should do so by 7 August. For further information regarding this opportunity at Perth Airport, and for a copy of the Speciality Retail Request for Proposal, please contact Lauren Coops, Retail Business Development Manager, Westralia Airports Corporation. retaildevelopment@wac.com.au; phone SPAIN. Tourvest Duty Free has commenced a three-year exclusive agreement with Vueling, Spain s second-largest carrier. Vueling is one of Europe s fastest-growing airlines, handling more than 12 million passengers a year. The boutique programme was launched on 26 July and is being managed by the new Tourvest España team based at Barcelona El Prat Airport. The appointment is a direct result of Tourvest s new business strategy and further Tourvest Duty Free España Account Manager Boz Ianeva (centre) with two members of the Vueling airline crew strengthens the company s ambitions to become a global inflight player, the company said. Tourvest Duty Free CEO Selwyn Grimsley commented: Vueling is a very dynamic airline and we are delighted to be appointed and associated with such a progressive airline. Being Europe s third-largest low cost carrier, Vueling very much complements our current portfolio of airline partners and introduces new dynamics to our business which we have embraced. We are delighted to be working with the Vueling management team who clearly have a passion for their business and the synergies between both our companies are clearly evident. Vueling CMO Lluis Pons added: We are confident that Tourvest is a great partner to launch our onboard Shopping. This is a win-win relationship that lets us learn a lot from each other. Tourvest Duty Free is providing their long experience in the traditional airlines model, and we are providing our know-how of the complex low-cost carrier operations. Moodie Interactive: Click for more information Page 6

7 US. The Chicago City Council Committee on Aviation has approved an ordinance that will allow the City to enter into a concession redevelopment and management lease agreement with Westfield Concessions Management at Chicago O Hare Terminal 5 (International Terminal). The ordinance is to be voted on by the full City Council at its next meeting today (28 July). The agreement provides for a complete redevelopment of the concessions programme in International Terminal 5 at O Hare International Airport. Dufry (replacing incumbent Duty Free Americas), Hudson Group and Áreas are set to run the duty free, news & gifts and food & beverage operations, respectively, The Moodie Report understands. The agreement, if ratified, is a double coup for Dufry, which also owns Hudson. Powerful Spanish food & beverage operator Áreas will be similarly delighted. Westfield s proposal for the redevelopment of the Terminal 5 Concessions Program is the best deal for the city s taxpayers, said Mayor Rahm Emanuel. Their proposal to invest more than US$26 million in capital improvements for the redevelopment of the Terminal 5 Concessions Program while creating 280 new jobs to Chicago will benefit international travellers and residents alike. Westfield, the successful respondent, was unanimously selected by a 20-member evaluation committee, after what the department called a thorough 16-month request-for-proposal process. The 20-year agreement calls for Westfield to redevelop and manage concessions in International Terminal 5. It does not privatise the terminal itself. The City retains full ownership of the terminal and has the opportunity to terminate the agreement at the ten-year mark, for any reason. The agreement provides an excellent opportunity for the CDA to redevelop Terminal 5 and contract with a recognised, proven industry leader to accomplish the necessary goals in making Terminal 5 a crown jewel for O Hare International Airport and the city, said Commissioner Rosemarie S. Andolino. We have come to this recommendation as a result of an incredibly competitive, thorough and transparent process. For more on this story go to FOOD & BEVERAGE & OTHER COMMERCIAL REVENUES FINLAND. Starbucks Coffee Company and leading food travel service provider SSP are to open the first Starbucks store at Helsinki Airport in early The move is another step in the partners drive into the Nordic market. Last month Starbucks and SSP announced plans to open a store at Oslo Gardermoen Airport, also in early SSP will operate two Starbucks stores at Helsinki Airport. One will be located in the Arrivals hall where it will be accessible to passengers and visitors from the city. The other will be located past security for passengers boarding flights. Since we opened the first Starbucks store in Sweden, it has consistently performed above expectations, said SSP Chief Executive Andrew Lynch. We re delighted to now be building on this achievement with the opening of these new stores to bring the Starbucks experience to customers in Finland and Norway. Starbucks opened its first store in Sweden with SSP in 2010, airside at Stockholm Arlanda Airport. It will also be opening the first Starbucks accessible to non-travelling customers at Gothenburg and Malmö railway stations. All the new stores will open in early SSP entered into a strategic relationship with Starbucks in June Since that time the company has opened 29 stores in the UK, Spain, France, Germany, Switzerland and Sweden. Page 7

8 RETAIL & COMMERCIAL SALES RESULTS CANADA. Canadian airport duty free sales surged by +12% year-on-year in the first six months of 2011, hitting C$108 million. In the same period, land border sales grew marginally (+0.4%) to C$57 million. [Note: The Canadian Dollar is trading at around 1:1 to the US Dollar]. That s according to figures from the Canadian Border Services Agency, released by the Frontier Duty Free Association. In June alone, airport duty free sales climbed by +14% to C$20 million while land border sales rose by +3.6% to C$12.6 million. More details appear at INTERNATIONAL. LVMH Moët Hennessy Louis Vuitton s Selective Retailing division, which includes DFS and Starboard Cruise Services, turned in a stellar first-half performance, posting organic growth of +18% year-on-year with a +63% increase in profit from recurring operations. LVMH singled out the performance of DFS, noting: Sustained by the continued growth in Asian tourism, DFS reaped the rewards of its upscaling strategy and its development in new markets. The Gallerias in Hong Kong, Macao and Singapore recorded remarkable performances, as did North America which enjoyed good momentum. Renovation programmes continued in markets with strong potential. DFS s strong showing is all the more remarkable given the difficulties in its vital Japanese market, where outbound travel numbers have been hard hit this year by the impact of the March earthquake and tsunami. However that has been more than compensated by the continued extraordinary growth of the retailer s business with Chinese travellers. Also within Selective Retailing, domestic perfumery chain Sephora recorded an excellent performance and strengthened its position across all its markets, the company reported. Comparable store growth accelerated in the second quarter and online sales continued their LVMH revenue by business group, H vs H rapid growth. Business group H1 H1 Change on year ( millions) Reported Organic* Wines & Spirits 1,435 1, % +13% Fashion & Leather Goods 3,971 3, % +14% Perfumes & Cosmetics 1,518 1,441 +5% +11% Watches & Jewelry % +27% Selective Retailing 2,831 2, % +18% Other activities and eliminations Total 10,292 9, % +15% *with comparable structure and constant exchange rates Source: LVMH As a group, LVMH recorded revenue of 10.3 billion in the first half of 2011, an increase of +13%. Organic revenue growth was +15%. The company commented: All business groups contributed to this performance, which is even more remarkable coming on top of the strong growth in the first half of Profit from recurring operations for the first half of 2011 rose to 2,223 million, an increase of +22% compared to the same period in 2010, which had itself shown strong growth. Current operating margin reached 22%, an improvement on the first half of Group share of net profit increased to 1,310 million, an increase of +25%. Chairman and CEO Bernard Arnault commented: LVMH s excellent performance in the first half once again demonstrates the exceptional appeal of our brands, the attraction of our high quality artisanal products and the pertinence of our strategy. The first half was marked by the agreement with the Bulgari family to strengthen the long-term growth of the famous Italian Maison. This alliance will bring significant advantages both to the Bulgari Maison and to LVMH. We approach the second half of the year with confidence and are relying upon the creativity and quality of our products as well as the effectiveness of our teams to pursue further market share gains in our historical markets as well as in high-potential emerging markets. Full details on the performance appear at Page 8

9 MEXICO. Grupo Aeroportuario del Sureste (ASUR) has posted a sharp +10.5% rise year-on-year in commercial revenues for the second quarter of This was driven by higher passenger traffic (up +2.9%) but more particularly by a commendable +8.3% gain in commercial revenue per passenger to MXN66.22 (US$5.70). Domestic figures increased by +5.7% and international passenger traffic edged ahead by +0.9%, the latter driven mainly by a +1.2% gain in international traffic at Cancún airport. The Mexican operator s total revenues increased by +7.1% due to increases of +5.4% in aeronautical revenues, +9.3% in non-aeronautical revenues (buoyed by the commercial performance) and +9.4% in construction services revenues. For the first six months commercial revenues gained +8.1%, driven again by a +8.3% increase in commercial revenue per passenger. For full details of ASUR s performance in June and in H go to UK. BAA (SP) Limited, which owns London Heathrow and Stansted airports, has reported a +7.6% increase in net retail income (NRI) per passenger to 5.59 (US$9.19) for the first six months of Led by a starring performance by London Heathrow Airport, gross retail income increased by +14.2% to million (US$404.9 million) and net retail income surged by +15.3% to million (US$379.9 million). That strong commercial showing helped drive a +12.1% increase in total revenues and a +27.1% spike in adjusted EBITDA. Passenger traffic reached record levels at Heathrow, rising +9.1% year-on-year (2.9% underlying) for the flagship airport. Total traffic was up +7.1% at 41.4 million. The Group s retail business continued to perform very well, the company said, driven by the strong gain in NRI per passenger. At Heathrow gross retail income increased +16.4% to million (US$340.6 million) and NRI per passenger increased +7.7% to 5.98 (US$9.81). The performance was led by duty and tax free, airside specialist shops, car parking and catering. Strength in duty and tax free was supported by a new walk-through area in the World Duty Free store in Terminal 3 and extension of the same retailer s store in Terminal 5. In airside specialist shops, the luxury segment continued to BAA (SP) net retail income per passenger H H1 H1 Change on year Heathrow % Stansted % Total % benefit from strong trading consistent with experiences in this sector outside airport outlets, BAA SP said. Strength in car parking reflected increased usage, tariff increases and strength in premium business usage. Stansted Airport s gross retail income increased by +3.7% to 39.2 million (US$64.3 million), a good performance, BAA said, given passenger trends which meant that NRI per passenger increased +4.2% to 4.10 (US$6.73). Source: BAA (SP) Limited Growth in Stansted s retail income reflects particularly performance in car parking due to achieving higher yields per user, the company commented. Over the whole of 2011, the Group continues to expect growth in net retail income per passenger to moderate from recent levels to around +6% as disclosed in the investor report issued in June BAA Chief Executive Colin Matthews said: This is a strong financial performance that reflects record passenger numbers, increased revenue per passenger and good cost control. We remain focused on customer service and Heathrow has achieved some of its best ever levels of flight punctuality and baggage delivery. BAA is investing 1 billion in new passenger facilities at Heathrow during 2011 and the airport s newest, Terminal 5C, opened in June, improving passengers experience of the airport. BAA confirmed that it is considering a judicial review of the Competition Commission s continued demand that Stansted and a Scottish airport (either Glasgow or Edinburgh) be sold. Page 9

10 DATA ROOM PASSENGER TRAFFIC NEWS ASIA PACIFIC. Airlines in Asia Pacific carried 15.5 million international passengers in June, +4.4% more than the same month last year, according to the latest figures from the Association of Asia Pacific Airlines (AAPA). International passenger traffic in revenue passenger kilometre terms increased by +4.5%. Available seat capacity grew by +6.7%, again outpacing passenger demand, resulting in a 1.6 percentage point decline in the average international passenger load factor to 77.5%. AAPA Director General Andrew Herdman said: During the first half of the year Asia Pacific airlines carried 92 million international passengers, +3.1% up compared to the same period last year. However, capacity grew by +6.8%, resulting in a 2.3 percentage point fall in the average international passenger load factor, to 75.8%. At the same time, international air cargo demand during the first half of the year was relatively soft, declining by -3.2% compared to last year s post-recession restocking surge. The outlook for the second half of the year still remains reasonably positive, given the normal seasonal pattern of stronger demand for both passengers and cargo. Amongst positive indicators, it is encouraging that Japan-related traffic is starting to recover and, more broadly, consumer confidence across the Asia Pacific region remains robust. HONG KONG. Hong Kong International Airport (HKIA) welcomed 25.8 million passengers and recorded 162,485 flight movements in the first half of 2011, representing year-on-year growth of +5.7% and +12.1% respectively. The growth was well supported by a strong performance in June, the airport company added. The number of passengers and flight movements at HKIA reached 4.4 million and 27,085 respectively in the month, up +5.8% and +9.3% over June The growth in passenger traffic in June was mainly driven by visitor traffic and Hong Kong resident travel which registered increases of +8% and +7%, respectively. Passenger traffic to/from Southeast Asia performed particularly well. Airport Authority Hong Kong CEO Stanley Hui Hon-chung said it was encouraging to see the steady growth of passengers and flight movements in the first half of the year. Over the past six months we have seen air traffic movements set a new daily record, and five new airlines started operating in HKIA. The promising performance reaffirms HKIA s status as the international and regional aviation hub and a preferred gateway to the Mainland. UAE. Dubai International Airport has posted record passenger traffic for the first half of 2011, with volumes hitting 24.6 million, up by +8.9% on the first six months of Dubai is now the world s fourth busiest airport for international passenger traffic, noted Dubai Airports. Dubai International handled a total of 4.07 million passengers in June, up by +10.4% from the 3.68 million who passed through the airport in June In terms of top destinations served by Dubai International, the five countries with the greatest passenger volumes year to date are India, the UK, Saudi Arabia, Pakistan and Iran. The fastest-growing regions for passenger traffic during the first half of the year include Eastern Europe (+302.4%), AGCC (+28.2%), Russia & CIS (+20.8%), North America (+16.8%), Asia Pacific (+13.2%) and the Indian Subcontinent (+8.3%). As the numbers clearly suggest, robust passenger traffic growth continues despite high fuel prices and growing economic uncertainty in Europe and the US, said Dubai Airports CEO Paul Griffiths. OAG ranking of world airports by international commercial passenger flight departures, week commencing 8 August 2011 Rank Rank Airport Country Flights Change in week on year* 1 1 London Heathrow UK 4,182 +2% 2 2 Paris Charles de Gaulle France 4,110 +1% 3 3 Amsterdam Netherlands 3,974 +7% 4 4 Frankfurt International Germany 3,729 +2% 5 9 Singapore Changi Singapore 2, % 6 5 Munich International Germany 2,725 +5% 7 6 Hong Kong International China SAR 2,706 +9% 8 7 Dubai International UAE 2,550 +5% 9 8 Madrid Barajas Spain 2,453 +2% Zürich Switzerland 2,300 +5% London Gatwick UK 2, % Vienna Austria 2,191 +1% Toronto Lester B Pearson Int. Canada 2,162 1% Rome Fiumicino Italy 2,085 +5% Istanbul Atatürk Turkey 1, % Incheon International South Korea 1,901 +8% * w/c 8/8/2011 vs w/c 9/8/2010 Source: OAG Page 10

11 TRAVEL & TOURISM NEWS US (HAWAII). The effects of March s earthquake and tsunami continued to impact Hawaiian tourism in June as Japanese arrivals decreased -16.1% year-on-year. However, total spending and spend per traveller continued to hold up well, something noted recently by leading travel retailer DFS whose Japanese business has been surprisingly resilient since the disasters. DFS has also benefited from a sharp increase in the number of Chinese and Korean visitors to Hawaii (see below). A DFS spokesperson told The Moodie Report: Our market is predominantly international rather than US. The big driver for us is the strong Yen which means that even though Japanese arrivals are down, their spending is exceptional. Also strong in terms of both spending and arrivals are Korea and the PRC. So we are enjoying excellent results, and prospects are strong for continuation of this trend. New figures from the Hawaii Tourism Authority show that 84,950 Japanese arrivals were recorded in the month. For the first six months of 2011, Japanese arrivals fell -9.2%. But those who did come spent more. Higher average daily spending ((US$303 per person, up from US$257 per person in 2010) contributed to a +2.1% growth in total Japanese visitor spending to US$149.2 million for June. A stronger Yen, which boosted shopping and food & beverage spending, contributed to the increase in daily spending, the authority noted. The number of Japanese visitors who purchased group tours has continued to decline significantly over the last four months [March (-35.6%), April (-48.7%), May (-41.7%), June (-25.8%)] compared to the same months last year. Total Japanese arrivals decreased -9.2% in the first half, but average daily spending was higher at US$285 per person compared to US$255 per person in the first half of Total spending by Japanese visitors for the first half of 2011 was US$890.8 million, an increase of +5.6% year-on-year. Importantly, the number of other visitors (i.e. from outside Japan, the US and Canada) rose +29.9% in June to 71,644 and by +19.8% in the first six months to 394,683. Visitors from Other Asia comprised the largest share of that group at 24%. Arrivals from Other Asia climbed +41% from the first half of 2010 to 94,716. Hawaii arrivals numbers and spending: June 2011 vs June 2010 Visitor arrivals Average length of stay (days) Spending per person per trip (US$) Arrivals from June 2011 Change on year June 2011 Change on year June 2011 Change on year US West 274, % % 1, % US East 160, % % 1, % Japan 84, % % 1, % Canada 16, % % 1, % Others 71, % % 2, % Total by air 607, % % 1, % Total by ship 200 n/a 2.67 n/a n/a Total 607, % % 1, % Arrivals from Jan June 2011 Change on year Jan June 2011 Change on year Jan June 2011 Change on year US West 1,454, % % 1, % US East 857, % % 1, % Japan 527, % % 1, % Canada 269, % % 1, % Others 394, % % 2, % Total by air 3,503, % % 1, % Total by ship 62, % % % Total 3,565, % % 1, % Source: Hawaii Department of Business Economic Development & Tourism Research & Economic Analysis Division Page 11

12 Arrivals from South Korea increased +11.6% to 46,123 in the first half. This market has been growing rapidly since South Korea joined the US Visa Waiver Program in Supporting the growth in arrivals was a new direct service launched by Hawaiian Airlines in January In addition, Korean Airlines increased its service in June 2010 and added a twice-daily service in March this year. In particularly important news for DFS, arrivals from China rose +19.7% to 36,565 in the first half of Contributing to the increase in Chinese visitors were three direct charter flights from Shanghai to Honolulu, which began in January and February The impact of these nationalities can be seen by the high per-person, per-day spending of other visitors in June, at US$179.6 second only to the Japanese with US$ Given that others also includes a significant number of relatively low spenders (Australians, New Zealanders), the Korean and Chinese spend is certain to be much higher. Total expenditures by visitors (all nationalities) who came to Hawaii in the first half of 2011 rose +18.4% year-on-year year, to US$6 billion. Total visitor days for all visitors increased +6.8% and total arrivals grew +4.7% to 3,565,963 visitors. Total expenditures by US West (+11.8%), US East (+16.1%) and Canadian (+31.2%) visitors continued to increase by double-digits in the first half of 2011, boosted by higher average daily spending and growth in arrivals. PEOPLE NEWS, JOBS, EVENTS & NOTICES ASIA PACIFIC. Heinemann Asia Pacific has named Bob McFadyen as Regional Director Australia, New Zealand and Oceania. McFadyen, long-time head of retailing at Sydney Airport before moving to a role overseeing commercial at Budapest Airport, will provide specialist advice to help drive the company s travel retail business in the region. INTERNATIONAL. Diageo Global Travel & Middle East (GTME) has announced a number of key changes to its executive team, amid a group-wide restructure. The moves are aimed at making the unit more agile, more responsive in decision making and positioning it closer to sources of major growth in travel retail, said Diageo GTME. The programme reflects the roll-out of Diageo s new global operating model, which was announced by Chief Executive Paul Walsh in May. The key GTME changes include the appointment of Steve White as Marketing Director, and of Sarah Walton as HR Director. She replaces Nikki Cartwright, who leaves the company in September. Also departing are Corporate Relations Director Tim Rycroft and long-time Regional Director Europe Olaf Grewe. Full details on these changes, plus comment, appear at Thank you for your readership and support of The Moodie Report. Martin Moodie, Founder and Chairman Page 12