Dubai:
Dubai Duty Free, world’s largest single-operation travel retailer that recently raised $1.7 billion from a consortium of lenders to part finance Concourse 4 at the Dubai International Airport, will not seek fresh funding to support Dubai airport’s expansion, a top official said.
Dubai International Airport is currently undergoing a Dh28 billion expansion — it’s fourth phase — that will help raise the airport’s passenger handling capacity to 90 million by 2017.
“None of the banks were willing to lend us $3 million when we set up Dubai Duty Free in 2003. However, two months ago, 26 banks raised $1.7 billion for us to support infrastructure works at the Dubai International Airport,”
With this funding, Dubai Duty Free, which has largely benefited from the growth in Dubai’s aviation and tourism sectors, is now contributing to Dubai’s next phase of growth.
Colm Mclaughlin, Executive Vice Chairman of Dubai Duty Free, told the audience at the annual conference of the Middle East Duty Free Association (Medfa) yesterday.
“We will not need to raise any more funds in the next two to three years. But things could change after that.”
Dubai Duty Free on Sunday reported an 11 per cent growth in sales to Dh4.71 billion ($1.29 billion) from January to October this year, compared to the same period last year.
“We are on track to achieve our sales target of Dh5.9 billion ($1.6 billion) this year,” he told Gulf News.
These sale figures do not include the revenues generated from the Irish Village outlets — that is expected to generate Dh40 million this year and the revenues from Dubai Creekside Hotel, developed by the Dubai Duty Free at a cost of Dh640 million and currently being managed by Jumeirah.
Mclaughlin said, his organisation is gearing up for the opening of Concourse 3 where 8,000 square metres will be added to the existing duty free operation. “We have already hired 1,200 staff to manage the expansion. We currently have 5,500 people on payroll,” he added.
One in two passengers that pass through the Dubai International Airport purchases something from Dubai Duty Free. Passenger throughput at Dubai International reached 51 million last year. Which means more than 25 million passengers shopped at the Dubai Duty Free.
“Average spending at the Dubai Duty Free is about $49 per passenger — higher than the industry average,” he said.
South Asian passengers make up the biggest group of spenders, accounting for 24 per cent of total sales at Dubai Duty Free, followed by Far Eastern passengers, primarily Chinese, who account for 19 per cent of sales. Analysts say, airlines’ baggage weight restrictions help boost sales at the duty free outlets as holiday shoppers see these as a way of carrying more baggage without having to beat the weight restrictions.
Dubai Duty Free’s total sales represent nearly 50 per cent of all the duty free sales in the Middle East and North Africa (Mena) region. Duty free generates nearly $40 billion worth of sales worldwide.
Dr Costas Verginis, Director, Consulting Real Estate and Hospitality, Deloitte and Touche, said, “With nearly 8 per cent economic growth and 4 per cent population growth — many young people will start travelling in the coming years that will help the travel retail business grow in the Middle East.”
