APTRA's Sunil Tuli on navigating the pressures and opportunities in Asia Pacific travel retail
Sunil Tuli: On challenges and opportunities in Asia Pacific travel retail
In a roundup of 2024 activities and trends, Sunil Tuli, Group Chief Executive, King Power Group Hong Kong, and President of the Asia Pacific Travel Retail Association (APTRA) offers his opinion on navigating the pressures and opportunities in Asia Pacific travel retail.
“The Asia Pacific region has long been the central growth engine for travel retail and, in my opinion, it will continue to be the driving force for its long-term prosperity and success, “Tuli says. “While it’s true that 2024 has undoubtedly been a year of significant pressure in many parts of Asia Pacific, especially in the world’s second largest economy, it’s also been one of resilience and tremendous emerging opportunities.
“This sums up the enigma of Asia Pacific; a region with little uniformity and a vast array of distinctly different cultures, societies, politics and increasing regulatory influences, but always with energy for growth.”
Tuli considers the past dominance of the original Asian Tiger economies of Singapore, South Korea, Taiwan and Japan and the dynamic acceleration of India, Indonesia and Vietnam as important players both regionally and globally, the region is a rich mixture of diversity.
He notes that the Chinese economy continues to grapple with domestic growth lower than expected post-pandemic, with ongoing real estate challenges, rising unemployment – especially among the young – and an evolving regulatory environment. “This has put pressure on both consumer confidence and discretionary spending, impacting travel retail and the wider aviation and travel ecosystem.”
In November 2024, authorities unveiled the biggest fiscal package in recent years in a new effort to kick-start the economy as they face the impending threat of more tariffs from the incoming US administration.
“The tit-for-tat responses have only just begun and, on December 3, Beijing announced a ban on exports to the US of minerals used in semiconductor manufacturing in the latest iteration of trade tensions,” Tuli continues. “Hopefully, the rhetoric will not translate to a full blown trade war but the likelihood of damage to the global economy, and almost certainly all parties involved, is high and means that there are many more ripple effects to come in 2025, inevitably impacting consumer sentiment and international trade. In addition, there is also the impact of Chinese tariffs on EU cognac, an issue that in late November, the European Commission formally requested consultations on at the World Trade Organization (WTO).”
He also details the martial law episode in South Korea in early December – albeit short lived – and how it sent shockwaves amongst democracies worldwide. According to Tuli, it underlines a trend “that has played out in many guises this year, from politicians to celebrities to car manufacturers; there is zero room for complacency in assuming you know your audience, what they want today, and how they will react to change”.
Tuli believes that, in addition to these economic headwinds, the geopolitical landscape has created uncertainty for the entire travel and retail ecosystem, with airline capacity restrictions an obvious casualty, spiking sector volatility. Several European airlines, unable to use Russian airspace, are now priced out of long-held routes to the region, especially in North Asia, resulting in longer journey times, increased fuel consumption, crew resourcing pressures and the physical limitations of some aircraft. The burden on European consumers of higher ticket prices and less choice are further pressures for travel retail.
According to Tuli, “there are always winners”, and several Chinese carriers are benefiting with the market awash with Chinese seats. However, visa restrictions in many countries are putting many, younger Chinese travelers off the previous top destinations and they are also cautious about spending abroad due to the rising economic uncertainties at home.
Travel retail research
He says industry research clearly shows that Chinese travelers are becoming much less driven by the quest for luxury goods and more attracted to experiences, often outdoor and with a wellness or sporting focus. For example, key out-takes from the World Travel Market in November include the surge in popularity for independent Chinese travelers wanting to see the real Alps in person in Austria, boosted by a tie-up between Austrian Tourism with operators in Sichuan, the so-called Alps of China whilst Saudi Arabia is targeting 5 million Chinese travelers by 2030 with sporting events and personalities being a key attraction. Equally, there is increasing interest in road trips and seeing the real-life version of locations used in popular films and streaming TV. “These shifts in behavior are leading to a more diversified travel spend and more competition for our industry,” Tuli adds.
“There is still a desire to shop for high quality items, but value for money and novelty are increasingly strong motivators, especially when they are more intrinsically linked to the experiences outlined above. Travel Retail brand and retail stakeholders must be tuned-in to the evolving preferences of this consumer segment and develop stronger cooperation to identify and deliver the most effective strategies to attract and engage them. This is made even harder by consumers’ heavy reliance on ecommerce platforms for research and pre-ordering, which makes the integration of stronger digital touchpoints into the travel retail experience a pressing need.”
Markets beyond China
Beyond China, Tuli notes, there are over 45 diverse markets across Asia Pacific to consider. “The strongest by far currently is India,” he says. “With rising middle class becoming a key force in both global and airport retail everywhere, governments across the world are vying to attract the Indian traveler. This month, for example, the Indonesian Ministry of Tourism is investing in a major experiential campaign in India to showcase Bali as the perfect destination on several levels, both leisure, luxury, adventure and in spiritual tourism, the latter being a growing sector amongst Indians.”
Indonesia also joins Thailand, Malaysia, in an increasing list of easy-to-reach holiday destinations offering visa free policy for Indian nationals, adding to the ease of travel and appeal of these destinations.
Tuli describes the modern Indian traveler as “a force to be reckoned with”, thanks to significantly higher disposable income.
In the liquor market, there’s a significant shift. Single malts, craft gins, tequila, Japanese whisky and Indian malts are gaining popularity and growing fastest. “What is really exciting to hear from APTRA members is the growth in the beauty segment, with perfumes and cosmetics set to drive growth over the next few years.”
These are topics that will feature in the upcoming APTRA India Conference 2025 (April 7-9, 2025) in partnership with Ospree Duty Free.
New market opportunities for travel retail
In 2024, countries across Asia Pacific, including Vietnam, Indonesia, Fiji, Japan, South Korea, Maldives, Thailand and Sri Lanka, excelled in global tourism with a surge in international arrivals. “This growth,” Tuli says, “fueled by relaxed travel restrictions, better air connectivity, and strong post-pandemic demand, is set to build further heralding new market opportunities for travel retail.”
In his opinion, travel retail operates in a world of uncertainty, but one thing is clear. “Asia Pacific remains resilient and dynamic," Tuli concludes. "It is an essential region offering a blend of natural beauty and cultural experiences, powered by significant tourism investment. By staying adaptable, innovative, in tune with our evolving consumers, and importantly, by deepening industry co-operation, we can navigate the challenges and thrive in 2025 and beyond."
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