Sydney Airport retail income surges by +14.3% in stellar first-half showing

AUSTRALIA. Retail was the stand-out performer in Sydney Airport’s first-half results announced today.

The sector delivered +14.3% revenue growth year-on-year to A$162.6 million (US$129.1 million) for the period ended 30 June, representing a 23% share of the airport’s total revenue (Note: The Moodie Davitt Report is in Sydney to produce a major feature on the transformation of Sydney Airport’s commercial offer. It will be published in our October Print and Interactive editions.).

“As a result of the most significant investment programme since privatisation, passengers are enjoying a vastly improved customer experience, with additional seating closer to gate, new terminal wayfinding, increased natural light and enhanced retail offerings. We’re delighted that this is being reflected in improved airline service ratings and customer service scores.” – Sydney Airport Managing Director and Chief Executive Officer Kerrie Mather 

This compared with a +7.7% rise in aeronautical revenues. EBITDA improved by +7.7% on passenger growth of +3.6%. International passenger traffic rose by +7.7%.

Property and car rental rose +3.3% to A$106.6 million (US$84.7 million), a 15% share. This moderate growth will be enhanced in the second half by hotel revenues from the newly opened Mantra hotel and the Ibis airport hotel acquired in July. Parking and ground transport revenue edged ahead by +2.2% to US$77.1 million (US$61.2 million), an 11% share.

Pertinently, Sydney Airport chose to put a photograph of the spectacular Heinemann Duty Free store on the front cover of its half-year results presentation, underlying the buoyant duty free and wider retail performance

The stellar retail performance was aided by the completion of the International Terminal (T1) luxury precinct and the opening of additional stores in Pier C. The new duty free offering from Gebr Heinemann delivered strong growth, the airport company said.

Coach opened a 130sq m stand-alone boutique at Terminal 1 earlier this year, marking the brand’s debut in Australian airport retail. The American leathergoods house joined a glittering array of designer and luxury brands in the transformed 1,900sq m fashion precinct.

Food & beverage revenues were boosted by the completion of the upscale City View precinct in T1 and the T2 (domestic) food court in late 2016, with leasing complete and all outlets opened by February 2017. The staged opening of the ambitious Marketplace in the international terminal is due for completion in the second half.
Sydney Airport Managing Director and Chief Executive Officer Kerrie Mather said the airport had delivered another strong result for the half year. “We continue to deliver on our strategy of investing in a significant improvement in customer experience and capacity to support our airline partners’ growth,” she said.

Kitchen by Mike (top), from executive chef and founder Mike McEnearney, and Joe & The Juice (below) are two of the outstanding F&B offers at the new City View dining precinct in T1

“Our capex programme over the last 12 months has delivered nearly A$400 million in improved facilities for passengers and airlines, with over A$250 million more to be delivered in the second half of 2017.

“EBITDA grew +7.7% on passenger growth of +3.6%. Key drivers of the result were international passenger growth of +7.7%, returns on capital investment in aviation infrastructure, and a strong contribution from retail due to solid trading and new shop openings in T1 and T2.”

The six fastest-growing nationalities among the traffic mix were all Asian

Mather added: “The inbound tourism market has seen strong growth of nearly +10% for the half and the rolling 12 months, with excellent performance from a diverse range of major Asian markets, including China, India, Philippines, Indonesia, Japan and Vietnam. This record growth reflects our competitiveness, successful airline marketing and tourism partnerships with DNSW and Tourism Australia.

“As a result of the most significant investment programme since privatisation, passengers are enjoying a vastly improved customer experience, with additional seating closer to gate, new terminal wayfinding, increased natural light and enhanced retail offerings. We’re delighted that this is being reflected in improved airline service ratings and customer service scores.”

 

 

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