HONG KONG. Hong Kong International Airport (HKIA) has reported a +3.7% rise in retail and advertising revenue for the year ended 31 March 2017, with the figure hitting HK$7,803 million (US$999.5 million). This represented 41.9% of total revenue for the airport company.

Airport Authority Hong Kong said: “This increase was a result of higher revenue from better licence terms, passenger growth at HKIA and new retail outlets in the Midfield Concourse, accompanied by retail promotion campaigns throughout the year.”

Other terminal commercial revenue, mainly from leasing airport lounges and offices, grew by +8% year-on-year.

The primacy of retail: The importance of the channel as shown in the HKIA annual report

Commenting on the performance, HKIA noted some key openings over the past year. These included the East to West Food Market — a 1,497sq m dining area in the West Hall — that became fully operational at the end of 2016. The “I Love Hong Kong” retail zone in the East Hall, which focuses on well-known local brands, has also proved popular with travellers, it added.

HKIA noted: “To optimise the zone’s productivity, we began converting two restaurants into retail space in a project that will be finished in 2017/18. The East Hall will also feature a unique concept that combines shopping with fine dining. In 2016/17, we introduced an array of retail innovations, including pop-up stores showcasing new retail categories such as drones and aerial photography systems, and a distinctive beer truck where travellers can enjoy a cold one before their flight. HKIA’s retail environment was also enlivened with virtual reality exhibitions, a 360-degree selfie experience and interactive screens.”

HKIA also expanded its free home delivery service, which originally served addresses in Hong Kong, Mainland China, Taiwan and Macau, to include Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

It said: “Adding convenience to passengers’ shopping experience, we also started the development of an online shopping platform. Merchandise ordered via the platform can be collected at HKIA or delivered to addresses covered by the home delivery service. The online platform will debut in 2017/18.”

The breakdown of passengers by market in 2016/17

Total company revenue grew +2.4% to HK$18,627 million (US$2,386 million), largely as a result of increased passenger traffic (+1.1%), flight movements and cargo throughput, plus the retail performance.

Hong Kong International exceeded the 70-million-passenger mark for the first time in 2016/17, reaching 70.5 million.

The group reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of HK$12,831 million (US$1,643 million), while profit fell by -1% to HK$8,276 million (US$1,060 million).