A Master Concession In Saudi Arabia Is A Timely Win For French Travel Retailer Lagardere

Lagardère Travel Retail has won a master concession contract at Saudi Arabia’s fourth busiest airport and will take control of it at the end of the year, making the French global duty-free retailer the only one to have operations at all four of the country’s international air gateways.

Incumbent retailer ATÜ Duty Free—a joint venture between Turkey’s Unifree (controlled by Germany’s Heinemann) and global airport operator TAV Airports—has held a contract there since 2015, running five outlets covering 13,200 square feet.

The win at Prince Mohammed Bin Abdul Aziz International Airport in Medina, a major pilgrimage destination, is an important step in Lagardère’s efforts to consolidate its retail business in the Kingdom of Saudi Arabia. Air traffic growth is expected to be rapid due to the government’s focus on international tourism, just one part of its ambitious Vision 2030 project which is creating new high-end tourism resorts costing billions of dollars.

Lagardère Travel Retail, part of the media giant Lagardère Group, has witnessed a strong retail rebound so far this year. It also saw promising growth from the oil state’s airports where it is present (Riyadh, Jeddah and Dammam), last year. In 2021, retail revenue from the Middle East surged by almost 40% year-on-year (down 15.5% on 2019), thanks to strong performances in Dubai (up 24%) and Saudi Arabia (up 48%) due to a fast recovery in air traffic.

Moving in date: December 2022

At Medina’s international airport, which is in the west of the country about 138 miles from the Red Sea, Lagardère will take charge of 14 new duty-free and retail spaces this December covering a total commercial area of 20,450 square feet of which 6,600 square feet will be allocated to duty-free stores.

Lagardère declined to reveal the length of the contract at Medina or which brands might be present from December, but a spokesperson told me: “To start with, the stores will be Aelia Duty Free and Relay branded stores, but over the longer term, with redevelopments, we may be developing new concepts and bringing in more brands.” Under the Aelia fascia, typical duty-free categories like perfumes, cosmetics, travel accessories, confectionery and souvenirs will be initially offered.

In a statement, Vincent Romet, the chief operating officer of Lagardère Travel Retail’s business in the Middle East and Saudi Arabia, said: “Our local teams are all hands on deck to start the new operations before the year ends. Saudi Arabia is an extremely dynamic market and we are very excited to open this new chapter.”

As Saudi Arabia weans itself off oil and diversifies—non-oil revenue increased by almost 122% between 2015 and 2020—tourism will become a new pillar for income and investment. Last week, Hungary’s low-cost carrier WizzAir—currently the seventh biggest airline in Europe—signed off on 20 new routes to the kingdom, one of the biggest route announcements this year.

While the inaugural flights from Europe do not include Medina, they will go to airports in Riyadh, Jeddah, and Dammam where Lagardère Travel Retail is present, with one-way fares starting at a low $55. The move is expected to bring over one million additional travelers to Saudi Arabia next year.

Wizz Air’s CEO Jozsef Varadi has described Saudi Arabia as “a long-term strategic market” for the airline which will no doubt send a message to all international travel retailers looking to expand in the region.