Heathrow retail is 23% of total revenue, up 7.7% in 2017 (cf. 2016) – car parking is 18% of retail income

Heathrow has reported a retail revenue increase of 7.7% to £659 million in the year ended 31 November 2017 compared to a year earlier. (Aeronautical revenue rose by just 1%. Total revenue in the period rose 2.7% to £2.9 billion. Retail is almost 23% of that. It was 22% in 2016). Retail revenue per passenger grew 4.5% to £8.45 in 2017 compared to £8.09 in 2016. Heathrow says growth in retail income was due to increased passenger traffic in the period to 78 million (+3.1%) combined with more spending airside (up 2% compared to 2016.) Retail concessions grew 10.5%, with growth in business by duty and tax free and airside speciality shops. This reflects the depreciation of Sterling since June 2016, making products cheaper for foreigners. The redevelopment of Terminal Four’s luxury retail offering completed in late 2016, also contributed to this growth. There is also a new Gucci store.Retail concessions made up 46% of retail income, at £304 million in 2017. The amount of income from car parking, which is included in retail, was £120 million in 2017 (up 5.3% and making up 18% of total retail income), £114 million in 2016 and £107 million in 2015. Heathrow says: “Car parking rose 5.3% driven by increased passenger numbers and a more 12 dynamic pricing strategy.  Higher car rental revenue from a change in arriving passenger mix and increased volumes in VIP services drove other services income up 9.4%.” 
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The details from Heathrow are at 

Heathrow (SP) Limited Results for the year ended 31 December 2017

http://mediacentre.heathrow.com/pressrelease/details/81/Corporate-operational-24/9215#

Below are two of the tables (Page 11)

Heathrow says:  “Car parking rose 5.3% driven by increased passenger numbers and a more 12 dynamic pricing strategy. Higher car rental revenue from a change in arriving passenger mix and increased volumes in VIP services drove other services income up 9.4%.”


Retail revenue growth boosts Heathrow Airport last year

By ANDREW PENTOL (TR Business)

Thursday, 22 February 2018

London Heathrow easily eclipsed predicted year-on-year retail income growth in 2017.

London Heathrow Airport has reported a retail revenue increase of 7.7% to £659m ($915m) in the year ended 31 October 2017. Retail revenue per passenger grew 4.5% to £8.45 in 2017 compared to £8.09 in 2016. Total revenue in the period rose 2.7% to £2.9bn.

Speaking to TRBusiness last October, Heathrow Airport Retail & Service Proposition Director Chris Annetts correctly indicated the airport was on target to “deliver or exceed” predicted year-on-year retail income growth of 6.7% to £652m. The target was based on a revised investor forecast last June.

According to the airport, growth in retail income primarily reflected increased passenger traffic in the period to a record 78 million (+3.1%) combined with greater airside participation (up two percentage points versus 2016) and increased retail spend per participating passenger.

Retail concessions grew 10.5%, with particularly strong performance in duty and tax free and airside speciality shops. This reflects the depreciation of Sterling since June 2016. The redevelopment of Terminal Four’s luxury retail offering completed in late 2016, also contributed to this growth. Passengers have benefited from increased space in the immigration hall to ease congestion and the opening of a new Gucci store marking the completion of the luxury retail development.

Heathrow Chief Executive Officer John Holland-Kaye said: “Heathrow had a fantastic 2017–welcoming a record 78 million passengers, giving our best service ever and offering better value for our passengers with lower airport charges.

“But while we are squeezing out small bits of growth, our rivals in France and Germany are overtaking us–for Britain to thrive post-Brexit, the government needs to crack on with Heathrow expansion as quickly as possible with a vote in Parliament before the summer.”

https://www.trbusiness.com/regional-news/europe/retail-revenue-growth-boosts-london-heathrow-airport-in-2017/138253

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Investigation reveals Heathrow airport staff are set targets to get passengers to spend money in shops

The Sun has used an undercover reporter to work as one of Heathrow’s Passenger Ambassadors, whose job is to boost retail sales in the terminals. There is a Channel 4 Dispatches programme on this, also showing how airport passengers are getting a raw deal from changing money. In 2016 the airport made a record £612 million in retail income, which is rent from retailers and from car parking charges. This was up 7.7% compared to 2015, while aeronautical income remained unchanged at £1,699 million. Heathrow’s retail division now makes up 22% of its revenues – £612 million out of £2,807 million. The 150 Passenger Ambassadors help travellers once they are through security, and are set strict targets about persuading them to visit shops and spend money. These are between £2,500 to £4,000 per day, and the most successful senior ambassadors claim to hit £10,000 per day. They are told: “The majority of the role will involve interacting with passengers, persuading them to shop if they had not planned to, or encouraging them to spend more by talking to them about offers and promotions across the Terminal….The average spend per passenger must go up as a result of your presence on the terminal floor.” The job description says: “A minute should not pass without a conversation with one or more passengers.”

http://www.airportwatch.org.uk/2017/02/investigation-reveals-heathrow-airport-staff-are-set-targets-to-get-passengers-to-spend-money-in-shops/

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Heathrow retail revenue in 2015 around 20-21% of total, at £568 million (£7.58 per passenger)

Heathrow Airport reported a retail revenue increase for the year ending 31st December 2016 of  +8.4% in 2015 to £568 million.  The revenue per passenger rose by  +6.2%  above the level in 2014, to reach £7.58.  (The Moodie report said the figure was about £7.14 in 2014, £6.21 in 2012, £5.95 in 2011, and £5.64 in 2010).  Over the year, Heathrow had an overall growth in revenue of +2.7% to £2,765 million in 2015.  EBITDA was £1,605 million, up +3.0%.  Heathrow also announced a +2.2% increase in passenger traffic in 2015 to 75 million.  For the figures for the first 6 months of 2016 Heathrow said its retail revenue had risen by 7.7% year-on-year, to £280 million – and retail revenue per passenger rose +7.1% to £7.84. Of this, duty and tax free shops contributed £62 million, a +3.3% increase.  Heathrow said that for the first 6 months of 2016, it made £62 million from duty and tax-free; £51 million from airside specialist shops; £24 million from bureaux de change; £22 million from catering; £55 million from car parking – with total retail revenue at £280 million.   i.e. of total retail revenue 19 – 20% was car parking.  Income from parking was £99 million in 2014 and £107 million in 2015. For the first half of 2016 the retail (including car parking) income was about 21% of total revenue.

http://www.airportwatch.org.uk/2016/08/heathrow-retail-revenue-in-2015-around-about-20-21-of-total-at-568-million-7-58-per-passenger/

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From a year ago:

 

From Heathrow’s

Heathrow (SP) Limited Results for the year ended 31 December 2016

24.2.2017

http://www.heathrow.com/file_source/Company/Static/PDF/Investorcentre/Heathrow-(SP)-FY2016-results-release-(FINAL).pdf

Some extracts from the results are copied below:

Passengers 75.7 million in 2016 compared to 75.0 million in 2015 (up 1.0%)

Retail revenue per passenger £ 8.09 in 2016 and  £7.58 in 2015 (up 6.7%)

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3.2.2 Revenue
In the year ended 31 December 2016, revenue increased 1.5% to £2,807 million (2015: £2,765 million).
Aeronautical £1,699 million in 2016 and the same £1,699 in 2015

Retail  £612 million in 2016 and  £ 568 million in 2015  (up  7.7%)
Other £496 million in 2016 and £ 498 million in 2015 (up 0.4%)

Total revenue £2,807 million in 2016 and  £ 2,765 million in 2015 (up 1.5%)

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3.2.2.2 Retail
In the year ended 31 December 2016, retail revenue increased 7.7% to £612 million (2015: £568 million).
Retail revenue per passenger rose 6.7% to £8.09 (2015: £7.58).

Duty and tax-free £138 million in 2016, and £128 million in 2015 (up 7.8%)
Airside specialist shops £115 million, and £100 million in 2015 (up 15.0%)
Bureaux de change  £50 in 2016, and  £53 million in 2015 (up 5.7%)
Catering £49 million in 2016 and £ 45 million (up 8.9%)
Other retail income  £86 million in 2016, and  £75 million in 2015 (up 14.7%)
Car parking  £114 million in 2016 and  £107 million in 2015 (up 6.5%)
Other services £60 million in both 2016 and 2015
Total retail revenue  £612 million in 2016 and £568 million in 2015  (up 7.7%)

 

“Retail performed strongly in 2016 following the major redevelopment of luxury stores in Terminal 5 including new brands which have strengthened Heathrow’s unrivalled airport shopping experience.

Performance in duty and tax-free stores has continued to improve following extensive store refurbishment in Terminals 4 and 5. Catering has grown in the year as a result of new and refurbished outlets and increases in passenger participation.

Car parking also performed well, with continued take-up of Heathrow’s expanded car parking product range and successful yield management. Growth in retail income accelerated in the second half of the year, particularly in areas such as duty and tax-free and airside specialist shops, driven by the depreciation of sterling following the EU referendum in late June
2016. Redevelopment of luxury stores in Terminal 4 was largely completed in late 2016 and started contributing to overall retail performance.”

“The benefits of investment in Terminal 5 retail outlets and new car parking capacity continue to flow through strongly with over £200 million secured out of the £300 million incremental commercial revenue target set for the regulatory period.”

http://www.heathrow.com/file_source/Company/Static/PDF/Investorcentre/Heathrow-(SP)-FY2016-results-release-(FINAL).pdf

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