Waving the flag for Lebanon and the MEA region
Lebanon proudly took centre stage today as 400 industry representatives converged on Beirut’s Phoenicia Hotel for the 2018 MEADFA Conference.
The event’s 17th edition opened
with a welcome address from MEADFA President Haitham Al Majali, who highlighted
the rebound in regional tourism spend noting 7.3% growth in Middle East duty
free sales in 2017 to US$6bn, with Africa also registering positive growth led
by Morocco and Tunisia.
A brace of Levantine heavyweights added
passionate local voice to the proceedings with HE Avedis Guidanian, the
country’s Minister of Tourism who spoke on behalf of Lebanon’s President Saad
Hariri calling the event “one of the most important conferences to be held in
He was followed by renowned international
fashion designer Elie Saab (whose Shiseido produced fragrance line is a global
P&C favorite), who spoke of the responsibility of his fellow countrymen to
“work tirelessly so that Lebanon plays a pioneering role in all domains.”
Day one speakers included 40-year industry veteran and Phoenicia Trading Company Chairman Mohamed Zeidan, who talked about the value of the Lebanese traveler as the “main driving force” behind the success of Beirut Duty Free’s operation at Rafic Hariri International Airport, fueled by a “love of quality.”
A challenging concession since the mid 90s when, said Zeidan: ”We paid unimaginable amounts at the time. However, Lebanese resilience has shown its worth over the years. Today we still face difficult circumstances, but we always bet on the future.”
Pressed further by moderator Dermot Davitt on the topic of aggressive concession bids and investment rationale, he openly acknowledged that following the 2017 win, and remarked: “We had to be ready to see losses for a number of years, as was the case in the past. Any duty-free success requires collaboration and while over the past 20 years the size of [Beirut] airport was negligible compared to other destinations, sales activity now matches many other regional airports.
“Everyone still sees Beirut as a window for new brands and with increasing collaboration with suppliers this year we are working to reduce losses and increase our margins.”
key success factor is Cuban cigar airport sales, with private jets ferrying
customers from Europe to purchase their preferred brands according to Zeidan,
who said: “Beirut airport has become one of the biggest destinations for cigar
sales. Back in 1975 we decided to stock five years’ supply so that we could
maintain continuity. This was one of the secrets of our success and we still
ensure today that we stock one to two years’ worth of cigars.”
The vast continent of Africa dominated pre-lunch discussions with a panel of speakers including Ali Tounsi, Secretary General ACI Africa; Isabel Zarza, Managing Director Africa, Dufry Group; Frédéric Chevalier, COO Europe, Middle East & Africa, Lagardère Travel Retail; and Blacky Komani, CEO Tourvest Ground Duty Free.
With 450mn passengers forecast to travel through Africa’s airports by 2040, infrastructure inadequacies and the high costs associated with running regional airports were flagged as development inhibitors, along with the perennial topic of political volatility.
Tounsi stressed the imperative to develop relationships with retailers in order to grow the sector, while Dufry’s Zarza pointed out that out of 400 delegates present, only 10 represented the entire African continent, with all 54 countries representing just 1% of global travel retail business.
She also alluded to the industry not having the right approach when it comes to pursuing regional opportunity, referring to the continent as the “youngest country in the world” from a demographic standpoint, with millions of teens and 20-somethings the untapped travelers of tomorrow.
“Dufry is in nine countries that all either have new airports or terminals, and traffic is projected to triple in the next 15 years, but airport authorities still don’t consider the value of retail and we need to change that,” she said.
Lagardère Travel Retail’s Chevalier stressed the need to treat Africa with the same standards and expectations that apply to doing business in other more developed countries; and investing in staff training to grow both credibility and drive commercial success.
He listed strong organizational capabilities and an in-situ country CEO as fundamental to mitigating development challenges, as well as a having a flexible business model. “To cope with relatively low volume airports, we try to bundle businesses together to lower the breakeven point and be more competitive,”
“Operating in Africa is costly, from the airport perspective as well as retail, and everything takes more time. [We have to] definitely work on the ability to scale partnerships with airports over time, and growing passenger numbers will also contribute to increased efficiency.”