rené riedi · airport construction projects in existing latin america airports (ex brazil) cost...
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René RiediChief Operating Office
Latin America and Caribbean
DUTY FREE & TRAVEL RETAIL IN
LATIN AMERICA & CARIBBEAN
The present and future
THE PRESENT & FUTURE
Airports Border Stores Cruise ships
PAST, PRESENT & FUTURE
Commodity prices The US $
Macro economic background
FORECAST GDP GROWTH
Source: E.I.U. Global Forecast May 2015
2015 2016
World 3.5% 3.8%
USA 3.2% 2.5%
Latin America 1.2% 2.1%
FORECAST GDP GROWTH
GDP IN LATIN AMERICA & CARIBBEAN
Source: World Bank
2014 Growth
Argentina -1.5%
Brazil 0.1%
Mexico 2.1%
Panama 6.5%
Peru 2.4%
Venezuela -3.0%
Jamaica 0.9%
Trinidad Tobago 2.1%
Costa Rica 3.7%
GDP CONTRACTION IN 2015
Source: World Bank
2015 GDP (Forecast)
Argentina -0.3%
Brazil -0.1%
GDP GROWTH IN 2015
Source: World Bank
2015 GDP (Forecast)
Peru 4.8%
Panama 6.1%
LOOKING AHEAD
Source: World Bank
2014 GDP (Estimate)
2015 GDP(Forecast)
2020 GDP(Forecast)
Peru 2.4% 4.8% 5.5%
Venezuela -3.0% -2.0% 0.5%
MAJOR IMPACTS ON TRAVEL BEHAVIOUR & SPEND
Currency devaluation
MEXICO CHILE COLOMBIA
DUTY FREE & TRAVEL RETAIL IN
LATIN AMERICA & CARIBBEAN
The present
THE PRESENT – ASIA PACIFIC
Dominated by downtown:
42% share of region sales
Source: Generation
Massive airport programin China:
250 airports by 2020
THE PRESENT – ASIA PACIFIC
Cruise business:
small but growing
THE PRESENT – ASIA PACIFIC
Border crossing:
basic offer
THE PRESENT – ASIA PACIFIC
Dominated by airports:
67% share of sales
Source: Generation
THE PRESENT – EUROPE
Highly concentrated in a few airports:
• Dubai
• Qatar
• Abu Dhabi
THE PRESENT – MIDDLE EAST
A varying mix of all channels:
• 39% Airports
• 5.1% Airlines
• 0.3% Ferries/Cruise
• 55.6% Other
A/P
Source: Generation
THE PRESENT – AMERICAS
THE PRESENT AND FUTURE OF AIRPORTSIN LATIN AMERICA
THE PRESENT – LATIN AMERICA AIRPORTS
2ndfastest passenger-growth region
(after Middle East)
THE PRESENT – LATIN AMERICA AIRPORTS5 countries – 65% of all international passengers
Mexico 34.9m 28%
Brazil 20.2m 16%
Costa Rica 10.8m 8.6%
Chile 7.4m 6.0%
Peru 7.2m 5.8%
64.4%
Source: ACI
Passengers (m) Yr. on Yr. change
Brazil – Sao Paolo 13.6 8.5%
Mexico – Cancun 12.0 10.0%
Mexico – Mexico City 11.5 8.1%
Colombia – Bogotá 8.3 9.8%
Chile – Santiago 7.3 6.3%
Peru – Lima 7.2 2.8%
Panama – Panama City 4.2 7.2%
Brazil - Rio de Janeiro 4.0 -3.7%
Jamaica – Montego Bay 3.5 5.4%
Costa Rica – San José 3.5 2.1%
Source: ACI
THE PRESENT – LATIN AMERICA AIRPORTS10 airports – 60% of all international passengers
• Latin America/Caribbean flights to double by 2031
• Largest internal flying market in all Americas
• Domestic travel to grow by 5.4% average p.a.
• Intra-regional will be 25% of all the regional interchange travel
• Brazil – 4th biggest air passenger market in the world
Source: ACI
THE FUTURE – AIRPORTS
Mexico CityMega Hub
Major infrastructure developments
THE FUTURE – AIRPORTS
BogotáEl Dorado Extension
PanamaNew Terminal
AIRPORT CONSTRUCTION PROJECTSIn existing Latin America airports (ex Brazil)
Cost Est.(US$)
Currentcapacity
Future capacity
Completion(Est.)
Santiago – Chile 700m 16m 29 to 50m 31 Dec, 2018
Bogotá - Colombia 1.26bn 14m 20m 28 Apr, 2016
Cancún - Mexico 750m 15m 25m 1 Jan, 2016
Mexico City - Mexico 321m 32m TBC 31 Dec, 2018
Lima – Perú 1bn 10m TBC 31 Dec, 2030
Panama City – Panama 840m 9m 18 31 Dec, 2026
San Salvador – El Salvador 490m 1.6m 6.6 1 Jan, 2032
Source: CAPA
New airport development must allow full potential for enhanced retail activity.
THE FUTURE – AIRPORTS
MAJOR IMPACTS ON TRAVEL BEHAVIOUR
Panama Canal Expansion Project
MAJOR IMPACTS ON TRAVEL BEHAVIOUR
Nicaragua Canal
CHINESE INVESTMENT IN AREA – BAHA MAR
THE PRESENT AND FUTURE OF AIRLINESIN LATIN AMERICA
Source: Airline 2014 Results/Airport Business
THE PRESENT – AIRLINES YIELD
2014 vs 2013 % Yield
Aeromexico -6.6%
Avianca -4.0%
Copa -4.4%
Gol +1.4%
Latam -6.7%
Volaris -5.9%
CONSOLIDATIONS AND MERGERS
+
+
+
+
LATIN AMERICA LOW-COST CARRIERSSize of fleet and orders
Fleet size Orders
Azul 151 63
Gol 135 81
Copa 98 61
Interjet 51 48
Volaris 50 45
Viva 28 52
TOTAL 513 350
Source: Various
U.S.A. AIRLINES
Source: Boeing 2014 Report
LCC SEAT SHARE BY FLOW
Intra-Mexico 63%
Intra-Brazil 45%
Caribbean-USA 34%
Intra-Central America 30%
Intra-Caribbean 26%
Intra-South America 23%
Mexico – USA 21%
South America – USA 5%
AIRLINES – THE PRESENT:Investment in new fleet
70% real growth
Source: Boeing 2031
2013 2033
Fleet size 1,380 3,530
THE PRESENT & FUTURE: Travel & Tourism 2014
Source: UNWTO & WTTC 2014
Global average +4.7%
Americas – best performing region +7%
Caribbean +7%
Central & South America +6%
METHOD OF ARRIVAL TRANSPORT: International visitors – 2020
Land/Sea Air Total
Central America 7m 7m 14m
South America 19m 21m 20m
Source: UNWTO & WTTC 2014
Source: Dufry estimate
Share $
Europe 12% 600m
USA/Canada/Caribbean 18% 900m
Asia 20% 1,000m
Central America 10% 500m
South America 40% 2,000m
TOTAL 100% 5,000m
BORDER STORES – MARKET SHARE
THE PRESENT AND FUTURE OF CRUISE SHIPSIN LATIN AMERICA
CARIBBEAN: CRUISE SHIP PASSENGER ARRIVALS 2014
23.9m+ 8%
GLOBAL CRUISE ITINERARIES
Source: Cruise Liner International Association 2014
2014 share 2013 share
Caribbean 37.3% 34.9%
Mediterranean 18.4% 21.7%
Europe 11.1% 10.9%
Australia 5.9% 5.0%
Alaska 4.5% 4.8%
Asia 4.4% 3.4%
South America 3.3% 3.9%
Other itinerary 14.5% 15.8%
CARIBBEAN CRUISE VISITORS 2014
Source: C.T.O.
Top 5 ports of call:
• Bahamas
• Cozumel
• US Virgin Islands
• Cayman Islands
• St. Maarten
CARIBBEAN TOURISM – SOURCE MARKETS 2014
Source: C.T.O. 2014
Visitors (m) % share
USA 12.9 49.1
Europe 5.0 19.1
Canada 3.2 12.0
Caribbean 1.7 6.5
South America 1.5 5.7
Other 2.0 7.6
TOTAL 26.3 100
CRUISE SHIPS: THE OPPORTUNITY
Total on-board spend per passenger: $415
Spent on on-board retail: $75
Source: CCIA Average 8 day cruise
On board sales mix Airport sales mix
Liquor/Tobacco/Perfumes 35% 66%
Watches/Jewellery/Accessories 33% 9%
Souvenirs 11% 1%
CRUISE SHIPS: SALES MIX
CRUISE PASSENGERS DWELL TIME
DAYS VS. HOURS
ENCOURAGING ON-BOARD SPEND
THE PRESENT & FUTURE
Border stores: Uncertain times
Airport stores: Catch-up time?
Cruise shops: Under performing
THE PRESENT & FUTURE
Border stores: Impressive retail experience
Airport stores: Investing in improvements
Cruise shops: Increasing spend per passenger
1. RAISING THE BAR
2. MORE COMPETITIVE
3. GREATER SHARE OF SPEND
• Excel at the basics
• Motivated, well trained staff
• Best brands, best choice
• New, exclusive, specials
• Competitive pricing
• Outstanding customer service
• Innovative marketing
• Investment in store environment
• Explore on-line potential
THE PRESENT & FUTURE:Meeting the challenges ahead
Work as a Trinity
THE PRESENT & FUTURE
LANDLORD
OPERATOR BRAND
“ I NEVER THINK ABOUT THE FUTURE… IT COMES SOON ENOUGH ”
Albert Einstein
René RiediChief Operating Office
Latin America and Caribbean