Lagardère Travel Retail won a major concession deal at Saudi Arabia’s fourth busiest airport and will take control at the end of the year, making the French global duty-free retailer the only one with operations at all four international airports in the country. gateways
Incumbent retailer ATÜ Duty Free, a joint venture between Turkey’s Unifree (controlled by Germany’s Heinemann) and global airport operator TAV Airports, has had a contract there since 2015, running five outlets covering 13,200 square feet.
The victory at Prince Mohammed Bin Abdul Aziz International Airport in Medina, a major pilgrimage destination, is an important step in Lagardère’s efforts to consolidate its retail business in the Kingdom of Saudi Arabia. Air traffic growth is expected to be rapid due to the government’s focus on international tourism, only part of its ambitious Vision 2030 project you are creating new high-end tourist resorts costing billions of dollars.
Lagardère Travel Retail, part of the media giant Lagardère Group, has witnessed a strong retail rally so far this year. It also saw promising growth at airports in the oil state where it is present (Riyadh, Jeddah and Dammam), last year. In 2021, Middle East retail revenue increased by nearly 40% year-on-year (down 15.5% from 2019), thanks to strong performances in Dubai (up 24%) and Saudi Arabia (up 48%) due to to a rapid recovery in air traffic.
Move in date: December 2022
At Medina International Airport, which is located in the west of the country some 138 miles from the Red Sea, Lagardère will take over 14 new duty-free and retail spaces this December that will cover a total commercial area of 20,450 square feet of the of which 6,600 square feet will go to duty-free shopping.
Lagardère declined to reveal the length of the contract in Medina or which brands might be present from December, but a spokesperson told me: “To begin with, the stores will be Aelia Duty Free and Relay branded stores, but in the long run, with remodeling, we can be developing new concepts and bringing more brands”. Under the Aelia fascia, typical duty-free categories such as perfumes, cosmetics, travel accessories, confectionery and souvenirs will initially be offered.
In a statement, Vincent Romet, director of operations for Lagardère Travel Retail business in the Middle East and Saudi Arabia, said: “Our local teams are ready to start the new operations before the end of the year. Saudi Arabia is an extremely dynamic market and we are very excited to open this new chapter.”
As Saudi Arabia moves away from oil and diversifies (non-oil revenue increased by almost 122% between 2015 and 2020), tourism will become a new mainstay for income and investment. Last week, Hungary’s low-cost airline WizzAir, currently Europe’s seventh largest airline, signed 20 new routes to the kingdomone of the biggest route announcements this year.
While the inaugural flights from Europe do not include Medina, they will go to Riyadh, Jeddah and Dammam airports, where Lagardère Travel Retail is present, with one-way fares starting at $55. The move is expected to attract more than a million additional travelers to Saudi Arabia next year.
Wizz Air CEO Jozsef Varadi described Saudi Arabia as “a long-term strategic market” for the airline which will undoubtedly send a message to all international travel retailers looking to expand in the region.