ASUTIL webinar reveals pockets of improvement in Latin American travel retail; Mexico the leading light

LATIN AMERICA. An improving picture for travel and the pace of vaccination programmes across Latin America emerged as key themes from yesterday’s Asociación Sudamericana de Tiendas Libres (ASUTIL) webinar, which addressed the challenges faced by travel retailers in the face of COVID-19.

The panel for the event, which was chaired by ASUTIL Secretary General José Luis Donagaray, featured Chamber of Uruguayan Free Shop Operators (CEFSU) Secretary General Carlos Loaiza; Latin America and Caribbean Air Transport Association (ALTA) Legal Director and Counselor Gonzalo Yelpo; Dufry Group CEO Nicaragua & Mexico Alvaro Neto; Dufry Group COO South America and ASUTIL President Gustavo Fagundes; and Tax Free World Association VP of Conferences Arnaud de Volantant.

Discussing the big travel retail issues at the ASUTIL webinar are (clockwise from top left) José Luis Donagaray, Arnaud de Volantant, Gustavo Fagundes, Alvaro Neto, Carlos Loaiza and Gonzalo Yelpo
Introducing the webinar, Donagaray revealed that the number of people in Latin America who have received two doses of the COVID-19 vaccine has doubled in the space of approximately one month, although he noted the region’s numbers are still some way behind North America and countries in the European Union.

“The civil risk approach to the virus is not reasonable, we need to coexist with the virus and take the measures that allow everyone to keep health but also develop the business or the wealth of the society” – ALTA Legal Director and Counselor Gonzalo Yelpo

CEFSU’s Loaiza, who in last month’s ASUTIL webinar announced that Uruguayan border stores had reopened, reported some encouraging early signs for the revival of the business. He revealed that since the stores recommenced trading at the start of June, sales are down just -16% measured against the comparable period in pre-pandemic 2019.

He also noted that spend per customer has increased +19% since reopening, compared with the same period two years ago.

The pace of COVID-19 vaccination programmes in South America trails the European Union and North America, but the gap has closed in recent weeks (Click to enlarge)

Loaiza said: “We are seeing a promising trend of increase in the average ticket because we are observing the early return of tourists with a higher purchasing power.”

ALTA’s Gonzalo Yelpo offered some candid opinions on attempts by governments in Latin America and the Caribbean to restart travel. He presented an improving picture for air travel across the region in 2021 compared to last year, sharing his belief that Latin America air traffic will recover to 2019 levels in 2024, a year behind the US. “We are in better shape but we are still in the red side of this game,” he said.

Yelpo claimed that the pace of recovery in Latin America is hampered by a lack of coordination on the restart of travel and the reopening of borders between countries. He contrasted this to the European Union, where a single market is allowing for a more integrated approach to opening up travel.

CEFSU Secretary General Carlos Loaiza revealed some encouraging numbers on the recovery of business and spend per basket in Uruguayan border stores (Click to enlarge)

He spoke out against the use of quarantines: “Quarantine is something that we are convinced is a deterrent for the decision of travelling and it is not the appropriate way of handling the equation [of keeping COVID-19 cases down].”

Yelpo gave the example of Argentina in putting up highly cautious barriers to travel, with the country recently introducing a restriction of a daily maximum of 600 passengers to be processed by a single airport. “That is something that brings lots of uncertainty to the business and to the travelling public,” he said. “Imposing a 600 passengers limit is something that is just unbearable. It’s not a sensible approach to the situation.”

Speaking more widely about the pandemic, Yelpo added: “The civil risk approach to the virus is not reasonable, we need to coexist with the virus and take the measures that allow everyone to keep health but also develop the business or the wealth of the society.”

Two speakers representing Dufry, the leading travel retailer in Latin America, gave upbeat opinions on the current travel recovery. First, the group’s CEO for Nicaragua & Mexico Alvaro Neto presented a bright picture for the travel retail industry in Mexico, where borders have largely remained open throughout the pandemic.

This graphic highlights the gradual recovery of air traffic in the Latin America and Caribbean region (Click to enlarge)

Neto gave three main reasons for Mexico’s relatively strong performance against other countries in the shape of open borders and high levels of traffic from the US; a slow recovery of the cruise market [redirecting business from places such as the Caribbean to Mexico]; and ‘vaccination tourism’ from South America.

Neto said that Dufry is on course for just a -12% to -15% decrease in business in Mexico for 2021 measured against 2019. “We are expecting a huge recovery in this second semester [of 2021] and we are very confident that we are in a good shape to recover the 2019 performance in 2022.”

“Tourism is very important for all the countries, especially in our region, and it’s too big to fail. That will not be accepted.” – Dufry Group COO South America and ASUTIL President Gustavo Fagundes

Dufry Group COO South America and ASUTIL President Gustavo Fagundes laid down a series of key areas for the travel industry to focus on as it emerges from the COVID-19 pandemic, including flexibility, more fluid supplier relationships and digitalisation.

He added an upbeat message on the future of travel and travel retail in the Latin America region: “Although we are facing a very difficult situation, the industry is going to move forward; travel is in the DNA among the people of the world and especially in this region. We are seeing that whenever people can’t travel to their usual destinations, they find other places to go.”

The projected speed of recovery for air traffic across the regions, with Latin America predicted to fully recover its 2019 traffic levels in 2024 (Source: ICF. Click to enlarge)

“Tourism is very important for all the countries, especially in our region, and it’s too big to fail. That will not be accepted.”

He added: “We need to show resilience. We have been learning a lot [in the pandemic period] and I am sure we are already different companies and different people [in the travel retail industry], with these learnings that we have had.

“We have to be more innovative; I’m always talking to my team about being innovative and I tell them thinking out of the box is not just a ‘nice to have’ anymore. This is the only way to survive.”

“We’re trying to do our best and we are here to support the industry, to support the brands, and to support the retailers” Tax Free World Association VP of Conferences Arnaud de Volantant

Tax Free World Association VP of Conferences Arnaud de Volantant provided an update on the organisation’s TFWA World Exhibition & Conference event in Cannes, scheduled for 24-28 October.

Reflecting on the need to stage a physical showpiece event despite the uncertainty surrounding travel, he said: “Everybody knows that things are different this year, so Cannes will be obviously different as well. We are just trying to adapt to the situation, the most important thing for us is that we can organise that event because we really believe that it’s needed by the brands and the retailers.

This graphic was presented by TFWA’s Arnaud de Volantant, showing the current status of countries for entry into France, where the organisation’s showpiece event is set to be held in October 

“We need to get together again, it has been a long, long time [since] we have been able to see each other. It is role of the association to try to put back the business with all the stakeholders together.”

De Volantant revealed that 140 companies have so far registered for the event and that there are now more than 250 exhibitor bookings.

He said: “This is actually a pretty good result given the situation, it’s more than half of the exhibitors [of the previous Cannes show] and in terms of retailers, a lot of them are waiting for the developments of travel restrictions to decide if they will come. Up to now we are pretty happy and optimistic about the attendance.”

He also stressed that the Côte d’Azur region – home to Cannes – is equipping itself for the return of tourism, and that public facilities, including travel hubs, will have enhanced health and safety measures in place. He said the same will apply to the event’s host venue, the Palais des Festivals convention centre.

De Volantant noted that the TFWA Cannes event will have a strong digital element, including the conference programme, for those who won’t be able to attend the event because of travel restrictions and other reasons.

He concluded: “We’re trying to do our best and we are here to support the industry, to support the brands, and to support the retailers.”

Food & Beverage The Magazine eZine