Summit of the Americas: Review
Perspectives on the road to recovery
We round up some key Knowledge Hub sessions that covered the rebuilding of the market and the future of industry relationships.
The path to recovery and the reshaping of industry relationships was a key theme across the Summit of the Americas week, with airports, retailers and brand owners weighing in on how the future is likely to look, and the dynamics that will influence it. A fascinating day one session – Road to Recovery: The Retailer Perspective – featured 3Sixty Chief Operations Officer Alex Anson-Esparza, Motta Internacional Senior Vice President Aurelio Barria and Dufry General Manager Sub-Cluster South America Enrique Urioste. The panellists agreed that while temporary relief measures granted by airports around Minimum Annual Guarantees (MAGs) have been welcome, a new model must quickly emerge and stay in place for the longer term, not just for the crisis.
Anson said: “I think the biggest risk that we have in the next three years – other than the inherent COVID risks – is that some airport commercial departments will see the positive evolution of domestic traffic as an enabler to go back to the rents that were being charged to duty free retailers in the international environment, which we all know cannot happen. “There’s been lot of agreed rent reliefs throughout the industry in 2020 and in 2021. I think critically, we need to be working with our airport partners to make sure those remain in place until the traffic does come back to similar levels to 2019. If some airports think that they can revert back to historical rents before this traffic, it could spell a crisis for many travel retail operators.” Urioste said: “Together we have to reinvent this. We will have to go back to a model where we share the success of the business coming back together. I think that the new world is going to be about risk sharing. The airport delivers the number of passengers, we commit to extract X amount of money for passengers delivered… a MAG per pax basis. “I don’t know if I am being too optimistic… but I think that this model is a fair model. It’s a model that during the crisis has been in place in the vast majority of airports. And it’s the way that I think that the future will take us.” Barria also emphasised the need for a revision in contract structures: “We have to change the rules of engagement. Definitely, we can no longer work with the same conditions that we had before. When we originally met to discuss the contracts, we were given an estimation of passengers for the time of concession for ten years with an annual growth of +6-7%. “Now, it’s going to take many years to even come back to those projections, and in some cases we will not even see that during the concession contract period. I agree that we have to have a relationship paying a variable percentage [of sales to the airport], according to the levels of passengers that we have. But we can no longer pay MAGs at the level we agreed to pay when we started the relationship.” Click here for our wider story and on the video for the full session.
An excellent session on 7 April involving four senior figures from the Americas travel essentials and speciality retail segment of airport shopping also took place in the Knowledge Hub, with all the participants reporting a strong bounce back in the US, driven by leisure travel. Marshall Retail Group Chief Development Officer Roderick McOwan, Stellar Partners CEO Padraig Drennan, Hudson CEO Roger Fordyce and Paradies Lagardère President & CEO Gregg Paradies tackled a number of key issues relating to airport retail recovery. These included discussions surrounding airport-retailer contracts, the rise of touchless shopping, the pace of store re-openings and how they see customer requirements changing in the face of the pandemic. Click on the video below for the full session.
The viability of the industry in North America was also a core theme of a panel on 8 April featuring leaders from members of the Airport Restaurant & Retail Association. SSP America Executive Vice President Pat Murray, Byrd Retail Group LLC President and CEO Judith Byrd, Hudson Executive Vice President and Chief Operating Officer Brian Quinn and Areas USA CEO Carlos Bernal spoke to Dermot Davitt about themes including the airport-retailer business model, the advance of in-airport technology and the manifold operational challenges they have faced. Click on the video below for the full session.
A fresh approach to airport commercial tenders was a highlight of the final day. There, the prospect of a new business model was discussed by PT&M Managing Director Eric Trichot, who detailed how his company has been planning a more flexible structure to contracts in recent bid processes. Lending their perspectives to an engaging discussion from an retailer and airport viewpoint were International Shoppes Director Matthew Greenbaum and Midway Partnership CEO (and Vantage Airport Group Chief Commercial Officer) Sammy Patel. Click on the video below to view the full session.
*Registered delegates can continue to visit the Summit of the Americas, download digital assets from exhibitors and view the Knowledge Hub and Engagement Lounge sessions in the post-event ‘encore’ period that continues until 9 May, through this link.
The Moodie Davitt eZine Issue 294 | 28 April 2021
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