Avolta details “bold and ambitious” goals to grow its APAC business

By Faye Bartle |

Freda Cheung

Freda Cheung, President & CEO Asia Pacific

With a number of key developments coming to fruition, including its operations at Wuhan Tianhe Airport T2 opening in April, the sky’s the limit for Avolta in the APAC region, as Freda Cheung, President & CEO Asia Pacific, tells TRBusiness.

Resilient travel demand, with spend-per-passenger above pre-pandemic levels, led Avolta to achieve strong CORE organic growth of 21.6% year-on-year (yoy) in 2023. CORE Turnover hit CHF 12,534.6 million (approx. US$14.904 billion) while its target CORE EBITDA margin was reached ahead of time (at 9% in 2023).

In this pivotal year of transformation for the travel experience player [which saw the successful completion of the Dufry-Autogrill business combination and the official name change to Avolta in November 2023 – Ed], CHF 30 million business combination synergies were realised, setting the foundations to deliver the full CHF 85 million in 2024, a year ahead of plan.

Avolta

Chanel boutique at Chongqing Jiangbei International Airport.

Asia Pacific (APAC) delivered a 4% share of net sales in 2023 – the smallest contribution of all its regions (behind Latin America, 13%; North America, 32%; and EMEA, 51%). However, the stage is set to grow this figure moving forward.

“Prior to our business combination, Dufry and Autogrill had modest footprints in APAC, which is one of the topics that makes our business combination so interesting,” said Freda Cheung, President & CEO Asia Pacific, Avolta. “The sky is the limit when it comes to opportunities here in APAC, with this region accounting for more than half of the world’s population, along with a much higher than average GDP growth in many Asian countries.

“As a newly united company, we have every intention to make the best use of our combined resources, network and partnership, and we have set bold and ambitious goals to grow this region in the years ahead.”

APAC delivers 84.4% organic growth in 2023

The APAC region delivered the highest organic growth for Avolta in FY23 at 84.4% (vs. 2022 proforma), generating CHF 557.8 million. In Q4 2023, improvements were underpinned by accelerating domestic and intra-regional travel, alongside the gradual recovery of inbound and outbound international travel.

This was despite Chinese intercontinental travel continuing to be impacted by air capacity constraints and reduced group travel volumes.

Avolta

Avolta manages the duty free outlets at Kempegowda International Airport Bengaluru T2 in a 50:50 JV with airport operator BIAL.

During the final quarter of the year, Avolta also boosted its footprint in India with a new contract in Hyderabad. More openings and refurbishments making an impact included: new retail and F&B stores at Bangalore International Airport; a Diptyque boutique and Crystal Jade restaurant in China’s Shanghai Hongqiao Airport; and a Schnitz at Gold Coast Airport in Australia.

Other key achievements over the course of 2023 include the seven-year contract extension at Kuala Lumpur International Airport for F&B. A quartet of eateries – Open House, The Loaf, Ahh Yum and Tealive – opened there in Q4 2023.

Avolta has also entered into a new five-year contract at Chongqing Jiangbei International Airport for four duty paid stores.

Landmark launch at Wuhan Tianhe T2

Another important new development is the strategic joint venture with Hubei Airport Group to oversee the operations of Wuhan Tianhe Airport’s Terminal 2 as master concessionaire for retail, F&B, convenience and hybrid concepts, managing a total of 77 outlets covering 13,000 sqm.

Operations successfully opened on 15 April, 2024, marking a major milestone as the first entity in the Chinese market to be jointly operated by Avolta.

“We are grateful for the trust and respect the Hubei Airport Group (HAG) has extended to us, and I’m truly proud of the Avolta China team for what they have accomplished in such a compact and challenging timeline,” said Cheung [the JV was first announced in October 2023 – Ed].

“We are enjoying our partnership with HAG and learning together as we journey on to deliver a one-of-a-kind experience there.

“Being the master concessionaire has afforded us the opportunity to offer travel retail, travel essentials and F&B all under one roof. This allows us a holistic approach encompassing everything from thematic design across the terminal through to store concepts, and customer service, ensuring a cohesive look and feel plus a 360° experience that offers something for everyone.”

Avolta

Diptyque at Shanghai Hongqiao International Airport.

The opening deepens Avolta’s reach in China, adding to its existing presence in Chongqing, Shanghai Hongqiao and Pudong.

By drawing on its global database of insights (spanning 73 countries), Avolta has the tools it needs to ensure its offerings are highly relevant in all regions, while monitoring closely evolving trends and travellers’ needs.

As Cheung revealed: “In cities such as Shanghai, we find that passengers gravitate towards recognisable international brands, while in Chongqing and Wuhan we notice a preference towards local brands together with what’s new and different.”

“One-stop shop” in APAC

Currently, Avolta is present in 11 countries in APAC across more than 30 airports, train stations and ferry terminal locations, with over 300 stores.

Avolta

Wolfgang Puck at Shanghai Pudong International Airport.

“We are now serving travellers with travel retail, travel essentials and F&B,” said Cheung. “This combination is extremely exciting, as we are now a one-stop shop with the ability to offer hybrid concepts and bundled services, as well as acting as master concessionaire for our airport partners.”

She added: “Across the board, we see that travellers increasingly want options, convenience and predictability with a resounding need for a strong sense of place. Bear in mind that it’s the same traveller who buys a bottle of perfume in duty free, who then grabs an afternoon coffee on the run, and picks up a magazine and a snack before boarding.

“To cater to these needs we are rolling out hybrid concepts across many of our locations and we expect this to develop further, becoming a key trend in the coming years.”

Ultimately, Avolta is eyeing its future in the Asia Pacific region with confidence.

“Studies indicate that APAC will lead intra-regional traffic growth towards 2030, which is one of the reasons I believe that the future of Avolta in APAC is bright,” added Cheung. “We are prepared to take advantage of this growth phenomenon by offering a traveller-centric experience that makes the journey as rewarding as the destination.”

This feature first appeared in the TRBusiness May 2024 issue, as part of the annual Leading APAC Operators report. Click here to read the ezine.

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