Dubai Duty-Free forecasts annual sales will increase 40 per cent to Dh5.1 billion ($1.4bn) in 2022. It plans to recall more of its staff laid off during the Covid-19 pandemic as passenger traffic through the world’s busiest international airport begins to rebound.
An influx of high-spending Russian, Saudi Arabian and Israeli travellers will help boost sales this year, with overall average spending per passenger to exceed pre-pandemic levels, Colm McLoughlin, executive vice-chairman and chief executive of Dubai Duty-Free, told The National.
“For this year, we’ve budgeted for sales of Dh5.1bn, and we’re confident about it, and we expect to achieve it,” Mr McLoughlin said in an interview at the company’s headquarters.
“What has come back very noticeably from 10 years ago is Russian traffic and what has increased considerably last year is Saudi traffic, and of course, we have the new Israeli traffic.”
The projected rise in annual airport retail sales comes as passenger traffic through Dubai International Airport started a gradual recovery in 2021 from the effects of the pandemic that hammered global demand for air travel and as the hub resumed operations at total capacity.
The emirate’s airport operator raised its forecast for annual passenger traffic from 2021 by two million, anticipating that traveller numbers will reach 28.7 million. Dubai Airports is projecting 57 million annual passengers for 2022.
After reopening the final phase of Concourse A at Terminal 3 last November, Dubai International Airport is operating at total capacity following 20 months of reduced operations because of the pandemic. In May, Dubai World Central, the emirate’s second airport, will reopen its passenger terminal.
This year, the airport retailer’s forecast of Dh5.1bn in annual sales was inching towards its record revenue of Dh7.4bn in 2019.
An emerging trend during the pandemic has been an increase in sales per head to $53 in 2021, from about $40 per sale in 2019. The number currently stands at $50.
“We think the increase per sale is because people haven’t travelled as frequently as they did before; they’re saving their spending spree for their travel event,” Mr McLoughlin said.
Mr McLoughlin said the Omicron variant was less severe than previous variants and that the aviation industry will rebound gradually.
“The global aviation industry is just waiting, like the start of a race, to come fighting back,” he said. “It’s just going to be by degrees.”
Returning to pre-pandemic levels of passenger traffic is likely to take another two years, he said, echoing similar forecasts by the International Air Transportation Association and industry analysts.
In the meantime, Dubai Duty-Free has adapted its strategy to changing consumer behaviours and preferences during the pandemic with offerings such as home delivery services and online orders.
The company also took measures to control costs and preserve cash during the pandemic, including staff lay-offs, avoiding overtime hours, reducing the value of stock in its warehouse by half to manage payments and avoiding extra promotional payments for events.
“We are in the right direction,” Mr McLoughlin concluded. “Our performance in 2021 and our aspiration budget-wise for 2022 indicates and confirms that we’re on the right track.”