Ireland’s ARI Needs To Pick Up Speed Versus Rival Travel Retailers

The global travel retail business of Dublin-based Aer Rianta International (ARI) surged by 13.9% last year, reaching a managed turnover of €1.24 billion. However, the increase failed to keep pace with its European competitors in the duty-free channel.

Although they are larger in terms of turnover, European peers—predominantly operating in the airport market—had a better time: Avolta grew by 22%, Lagardère Travel Retail by 23%, and Gebr. Heinemann by 25%

Like those retailers, ARI’s double-digit, year-over-year growth was underpinned by higher passenger volumes and what the Irish company said were “record passenger spends.” ARI’s CEO, Ray Hernan, noted that some of the airport locations where it is present also achieved record sales.

Despite advancing at a slower pace than its rivals, Hernan was pleased, describing 2023 as “a very successful year.” He added: “The remarkable performance across all our locations is a testament to our colleagues and teams providing exceptional retail experiences for travelers.”

ARI is treating 2023 as a recovery year and said that many business units achieved historically high turnover and levels of profitability. The company has direct or indirect retail interests in 14 countries in North America, Europe, South Asia, and the Middle East, plus minority shareholdings in Düsseldorf Airport in Germany, and Larnaca and Paphos airports in Cyprus.

Chanel at Vancouver

A core market for ARI is Canada which performed in line with 2019 levels even though pre-pandemic Chinese high-spenders are still thin on the ground. The retailer opened a freestanding Chanel duty-paid store at Vancouver International Airport last September and followed up in Edmonton Airport in mid-January 2024 with duty-free retail spaces, having won a contract to operate there in 2023.

ARI’s longest-standing business in Canada—some 25 years—is at Montréal-Trudeau Airport which was rebranded as Montréal Duty Free last year.

In its home market, ARI runs the retail operations at Dublin and Cork airports, the country’s two busiest. Both gateways saw surging passenger numbers last year, topping 2019 levels. The airports delivered strong growth for ARI across all categories, helped by the retailer stepping up its airport-exclusive products and first-to-market offerings in liquor, beauty, and confectionery.

Cyprus tops $100 million

In the rest of Europe, ARI’s joint venture with airport operator ANA in Portugal traded ahead of plan in its first full year of operation. This year, the focus is on the completion of a refurbishment to improve the retail experience in its mix of stores.

Larnaca and Paphos airports in Cyprus performed significantly better than 2019 with turnover exceeding €100 million ($108 million) for the first time. The business returned a healthy profit, helped by a strong summer peak. ARI noted: “The business continues to benefit from the spend from U.K. passengers following the reintroduction of duty-free shopping, post Brexit.”

Elsewhere in Europe, ARI’s operations at Podgorica and Tivat airports in Montenegro also traded profitably despite the lack of Russian and Ukrainian passengers. Many of those travelers have been frequenting Cyprus since Russia first attacked Ukraine in February 2022.

Middle East hopes

The Israel-Gaza war also had some impact on ARI which has a strong position in the Middle East. The retailer has operations in nearby Beirut Airport, Lebanon, where traffic was up by 12% overall last year, though the final quarter saw a 24% collapse in tourist arrivals according to Lebanon’s Ministry of Tourism.

Most of ARI’s operations in the region are further away in the Gulf. There, the travel retailer expanded its footprint by opening some eye-catching stores at the new terminal of Abu Dhabi’s Zayed International Airport.

In joint venture with a local partner, ARI, since November 2023, now operates the perfume, cosmetics, skincare, jewelry, and sunglasses categories in the terminal. The airport serves Abu Dhabi, the capital and economic hub of the United Arab Emirates (UAE), and should become a big revenue generator in 2024.

Elsewhere in Middle Eastern airports, ARI also had an uptick in business in Riyadh, Saudi Arabia; Muscat, Oman where trading was boosted by liquor and tobacco allowances in arrivals; and at Bahrain Duty Free. Finally in India, ARI’s joint venture at Delhi’s Indira Gandhi Airport delivered a performance described as “exceptional.”

In the current year, the retailer will be looking to open up more locations. “Our intention (is) to seek growth in key markets in the coming year, while also maximizing our current operations,” said Hernan. That means “exploring new territories” in the CEO’s words.

ARI has also revamped its branding last year and added the tag ‘Joy On Your Way’ in an attempt to set out a clear proposition that differentiates it from competitors. This followed many months of research. “We’re serious about joy,” Hernan quipped.