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Dubai, fresh from capturing the title of busiest international airport from London Heathrow, has set its sights on becoming the world’s top hub by retail sales this year as a flood of Chinese passengers add to a shopping spree.
Spending at Dubai International Airport should reach $2.1 billion in 2015, up from $1.9 billion last year, when 80 days of runway repairs cut receipts by about $50 million, said Colm McLoughlin, vice chairman of Dubai Duty Free, which runs 26,000 square meters (280,000 square feet) of retail space at the hub.
Dubai is vying for the top spot with South Korea’s Incheon International Airport, which serves the Seoul conurbation. The Asian base had sales of 2.09 trillion won last year, equivalent to $1.91 billion at current exchange rates. The two hubs have been trading positions in recent years, with Dubai ranked first in 2013, according to duty free analyst Generation Research.
“There are more and more Chinese traveling all the time,” McLoughlin said an interview. “Although one sector might drop, it’s replaced by something else. We expect to be No. 1 again.”
Chinese passengers who make up about 5 percent of Dubai’s total throughput contributed 13 percent of its duty free revenue in 2014, countering a decline in Russian spending after the weakening of the ruble, McLoughlin said.
Dubai International’s overall sales last year were led by 3.2 million bottles of perfume that generated revenue equal to $314 million or 17 percent of the total, followed by 17 million units of beer, wine and liquor on $286 million, 3.4 metric tons of gold items worth almost $164 million, and $160 million of tobacco products including 4.2 million cartons of cigarettes.
Electronics purchases included over 133,000 cameras, about 20,000 Apple Inc. iPads and more than 140,000 mobile phones.
Dubai International’s customer count increased 6.1 percent last year to 70.5 million, making it the top hub worldwide for cross-border passengers, a title held by Heathrow for decades. Owner Dubai Airports predicts the facility will overtake the total tally at its London rival, 73.4 million in 2014, this year to become No. 1 in the Europe, Africa and Middle East region.
In terms of retail revenue, six of the world’s top 10 airports were located in Asia in 2013, the most recent year for which Generation Research has published rankings, with Singapore Changi in third spot after Dubai International and Incheon. Three others were in Europe, led by Heathrow at No. 4.
The passenger count — and with it retail receipts — is surging as local carrier Emirates builds Dubai into a transit hub for travel between Europe, the eastern U.S., Asia, Africa and the Middle East with a mammoth collection of wide-body jets that includes the largest fleet of Airbus Group NV A380s.
To help boost its appeal to Chinese shoppers, Dubai Duty Free has hired 448 Mandarin speaks and installed signs in the language, and accepts Yuan and China Union paycards.
Chinese passengers particularly favor quality alcohol and Chunghwa cigarettes, of which Dubai Duty Free sold 131,000 cartons for 22 million dirhams ($6 million) in 2014, McLoughlin said. The brand is known as the “national smoke” and has become a status symbol in China, selling for $30 a pack online.
Business from African travelers is also increasing as the number of flights to the continent also gains, with smartphones being the most popular products, McLoughlin said. Emirates plans to add at least 10 new routes there by 2025.
Passengers from India and Pakistan are also “very important” and the retailer is monitoring relevant regulations all the time, McLoughlin said, with the Indian government’s changes to duty on gold depressing Dubai Duty Free’s sales of the metal by one-sixth last year.
This year, Dubai Duty Free is targeting sales of $48 per head, up from $47 in 2014, and aims to lift the proportion of departing passengers who buy to 50 percent from 49 percent.
The opening of Dubai International’s Concourse D, slated for May according to McLoughlin, is set to expand passenger capacity to 90 million and will feature 7,000 square meters of retail space, lifting the total to 33,000 square meters.
–With assistance from Kyunghee Park in Singapore.
This article was written by Deena Kamel Yousef from Bloomberg and was legally licensed through the NewsCred publisher network.