Duty free sales at select GCC airports including Doha to reach $3bn by 2026: Alpen Capital

Duty free sales at select GCC airports including Doha and Dubai are expected to grow by 65.5% y-o-y to reach $2.2bn in 2022, Alpen Capital has said in a report.
By 2026, duty free sales in Qatar, UAE and Bahrain are further projected to reach $3bn, implying an annualised growth of 8.4% since 2022, Alpen Capital said in its report on ‘GCC retail industry’.
It said the GCC nations have laid out strategic plans to promote the tourism sector as part of their long-term objective to diversify away from oil. This has led to investments in the development of tourism infrastructure, which includes expanding the airport capacity to complement the governments’ commitment towards the tourism sector. At the same time, the governments have been easing visa regulations to boost the number of tourist arrivals.
Duty free operators are the biggest beneficiaries of the expansion of the tourism industry, as the resultant rise in passenger traffic potentially leads to increase in sales.
Prior to the pandemic, international tourist arrivals in the GCC increased at an annualised growth rate of 2.8% between 2016 and 2019 primarily driven by the UAE (6.6% CAGR) and Kuwait (6.7% CAGR).
Majority of the demand was generated by personal, leisure and religious travel followed by business and professional travel during the period. With 35.7% inbound tourist arrivals in 2019, the UAE led the GCC countries in terms of share of international tourist arrivals, followed by Saudi Arabia (28.6%), and Bahrain (15.6%).
As a result of the Covid-19 led restrictions, GCC international tourist arrivals declined by 75% y-o-y in 2020. However, swift response to curb the virus through stringent policies and widespread vaccine deployment led to the crisis reach an endemic state. Consequently, tourist arrivals in the region witnessed widespread recovery in 2021, posting a 56.1% y-o-y growth compared to the end of 2020 to reach 27.7mn.
At the same time, passenger traffic at international airports in Doha, Dubai, Abu Dhabi, and Bahrain have also grown since 2020.
These factors have revived the region’s airport retail market, which was significantly hit during the pandemic.
Between 2016 and 2019, duty free sales at Doha, Dubai and Bahrain airports grew at a CAGR of 3.3% and cumulatively accounted for 44.1% of the Middle East’s total sales.
In 2020, duty free sales at these airports declined by 58.3% y-o-y and witnessed a revival of 11.5% y-o-y in 2021 to reach an estimated $1.3bn by the year-end.
Share of the GCC duty free sales of the total Mena region during 2021 improved to an estimated 46.9% from 44.1% in 2016.
Key Qatar Duty Free retail openings in 2021 included several luxury avenues, stand-alone airport boutiques, cafes and high-end brand stores among others130.
In 2021, the Hamad International Airport was recognised as the ‘Best airport in the world’ by the Skytrax World Airport Awards, while also being named the ‘Best Airport in the Middle East’ and ‘Best Airport with 25 to 35mn passengers’.
The airport was also recognised with awards for ‘Best airport staff’ in the Middle East and ‘Covid-19 airport excellence’ during the year, Alpen Capital noted.