The Central & Eastern European Travel Retail Association (CEETRA), the regional industry association representing companies in the travel retail industry in…
The Central & Eastern European Travel Retail Association (CEETRA), the regional industry association representing companies in the travel retail industry in the CEE region, has just completed an all-member survey on their strategies and outlook for the anticipated recovery from the Pandemic.
In a comprehensive summary of the findings, which you will find below, a range of airports, travel retail operators and other enterprises, confirmed the optimism of the CEETRA Chair, Patrick Bohl, Head of Retail and Property Management, Budapest Airport, that “the first passengers to take to the skies will be the citizens of the Central and Eastern European (CEE) countries”.
Key findings of the survey include:
- The best-performing traffic levels over the summer peak months tended to be around 50% of 2019 performance.
- Leisure/VFR traffic dominates and “the affluent business travellers still remain absent”.
- “Travelling was heavily impacted by sanitary regulations and total uncertainty of administrative requirements – that is still the major obstacle.”
- Employment levels have stabilised and there are even concerns about skills shortages emerging as a result of prolonged recovery.
- Relationships between stakeholders have remained strong, with CEETRA members reporting a “we are in this together” spirit.
- Support and cooperation from national governments varies greatly from country to country.
- CEETRA members appeal for support from brands as they do not have domestic markets to compensate for the severe impacts.
- The brightest area of recovery in the sector is border stores, one operator even reporting that “2020 was characterised by expansion, innovation and commitment”.
Commenting on the results of the membership survey, Patrick Bohl, CEETRA Chair, said: “Let’s be clear, nobody needs to look backwards at how seriously this Pandemic impacted CEETRA members. But, looking forwards, while we’d have really liked the reopening of trade this summer to have had a steeper curve, it’s absolutely clear that the shrinkage has stopped, the corporate reshaping of our businesses has been largely completed, and as a region, and as the representative group, CEETRA members have reopened for business and are fully prepared to just get on with the job of re-growing.”
CEETRA MEMBER SURVEY SUMMARY:
Central & Eastern European Travel Retail Association member survey presents optimistic, collective message on emerging from the Pandemic
A survey of all members of the Central & Eastern European Travel Retail Association (CEETRA), which spans airports, store operators, brands and other travel retail enterprises, has confirmed the optimism of the CEETRA Chair that “the first passengers to take to the skies will be the citizens of the Central and Eastern European (CEE) countries”.
The survey, conducted in August, asked at the outset if members agreed with the CEETRA leader’s statement (made in May by Patrick Bohl, Head of Retail and Property Management, Budapest Airport).
Heinemann, a leading travel retail operator and distributor throughout the region, reports: “We can already see that the business at our airports in CEE started off earlier than in the West.”
Among the airport operators, Fraport Slovenija agreed that its national catchment has a strong propensity to travel: “This mainly holds true for Fraport Slovenija, we also predict good results from the recent and soon-to-be-established lines (e.g. Dubai), not to mention a good increase in charter traffic.”
Another significant operator, Lagardère Travel Retail, also stressed it was “absolutely true” that market conditions in the CEE were rebounding faster than elsewhere in Europe. However, this was mitigated as “travelling was heavily impacted by sanitary regulations and total uncertainty of administrative requirements – that is still the major obstacle”.
Prague Airport, while indicating that traffic was some 70% down year-on-year compared to 2019, reports that “on peak days we are around 50% of pre-COVID levels” with the high summer months dominated by leisure traffic. Lagardère, which operates stores at both Prague and Warsaw airports, entirely echoed this, reporting “a passenger dynamic of -50%, – 40% versus the same period in 2019 – but the summer recovery has been promising, with a substantial increase in charter vacation flights”. This contrasted with Lagardère’s results earlier in the year, when traffic was 80% down versus 2019.
However, despite the re-emergence of leisure customers, all sides of the CEETRA community agreed with a Heinemann assertion that “the affluent business travellers still remain absent”.
An uneven impact on employment
Although there have been job losses and wage cuts across the board, the true cost to employment among CEETRA members has been uneven with Prague Airport reporting it had reduced the airport workforce by around 20%, although along with most other CEETRA members it “now considers the situation stabilised”.
There are also a number of cases of improving employment prospects, with Simillair, the Hungarian travel retail sales promoter, reporting that the number of its shop-floor staff employed “is directly linked to the activities ordered by the brands, and since brands are becoming more and more active, we are consequently re-employing more and more of our staff”.
Lagardère asserts that its strategy, since the beginning of the pandemic, has been to “retain our teams to the maximum – therefore, we did all possible to benefit from the official government help to save necessary employment”.
Looking to the future, Heinemann is among a number of CEETRA companies even becoming concerned about possible skills shortages: “As soon as the business recovers significantly, it might be very difficult to quickly increase the number of employees, because the labour market in the CEE region is already very tense.”
In line with Heinemann’s experience that the border shop business in Eastern Europe is tending to “recover faster than the airport business, and will return to its original level relatively quickly once the easing of travel restrictions takes effect”, Heinrig Romania, the Heinemann-associated Romanian border shop operator, asserted that it has not had any job losses for pandemic reasons whatsoever. “Even more than this, we have increased our personnel numbers due to several expansion projects initiated in the middle of the year.”
Stakeholders: is everyone working together successfully?
Relationships between all the stakeholders, ranging from airport, airline, retailer, brands and national governments, have been clearly stretched during the pandemic, although typically many CEETRA members in the survey reported a “we are in this together” spirit. Lagardère said: “We all suddenly faced the same enemy at the same time. That put us into the situation in which we had to find mutual agreements on a win-win basis.” Fraport Slovenija entirely supported this sentiment: “All stakeholders have shown solid understanding of the COVID-19 situation and, with several endeavours, some models have been established that should trigger a good restart of traffic.”
Heinemann, notably, said it has always had a very strong relationship with its airport landlords in the region. “We are therefore working hand-in-hand with our partners on solutions that will be instrumental for recovery. Our goal is a future-proof model of collaboration. Our expectation is a joint approach, a give-and-take from both sides with a balanced risk.”
Turning to brands, its other key stakeholder in the “Trinity”, Heinemann reflected that as travel retail is its single core market, it does not have other domestic markets that could compensate for COVID losses: “This is the major difference that we need recognition for from our brand partners.”
Meanwhile, support and cooperation from national governments varies greatly from country to country. Simillair comments: “Based on our experience and scope, every player tried to collaborate as much as possible, with one exception – the Hungarian Government.”
Heinemann commented that, in most countries, there has been more political debate than actual required action to provide the restart of travel, which still requires a clear, coordinated and consistent framework. “We urge policy-makers to coordinate and lift travel restrictions across Europe, to find transnational solutions like the EU Travel Certificate, and also to translate these into a global solution.”
Positive indicators “characterised by expansion, innovation and commitment”
As signs of the emergence from the pandemic continue, several CEETRA members offered positive indicators for a post-COVID recovery. Fraport Slovenija reports that “the frequency on almost all routes at Ljubljana is constantly increasing”, adding: “We are glad to announce two new routes at Ljubljana – Madrid and Dubai.”
Simillair is also optimistic about the return of global air connectivity: “We are keeping our fingers crossed, hoping for the Far East and transatlantic flights to resume ASAP.”
Prague Airport reports strong outbound traffic and lower but stabilised spend per passenger in its non-aviation business. “We still struggle with inbound traffic and are currently in negotiations with the government and tourist authorities to boost demand towards Q4 2021/Q1 2022.”
Heinrig Romania asserts that it has converted the COVID crisis into something of a strong opportunity: “2020 was characterised by expansion, innovation and commitment, visible in the great results of 2021 that by far exceeded 2019 with more than 20% growth.”
Besides COVID, post-Brexit developments continue to demand Heinemann’s attention in the region. Its retail sites, such as Budapest, Vienna and Vilnius, which have a high proportion of travellers to the UK, are benefitting from the return of duty free. “The biggest effects are on the tobacco category, where duty free purchases represent a saving of up to 70% versus the UK High Street. Unfortunately, we were not able to unlock the full Brexit effect yet due to the border closures/travel restrictions and low passenger numbers in 2020/2021. We hope that we will be able to take advantage of this opportunity in the coming months.”
