Avolta CEO Xavier Rossinyol seeks to allay investor concerns over US market slowdown

INTERNATIONAL. Avolta CEO Xavier Rossinyol played down investor concerns over the prospects for Avolta’s 2025 US market performance during the travel experience player’s 2024 financial results earnings call on Wednesday (12 March).

The US market was a key topic for questions from analysts in the face of news this week that major US airlines including Delta, American and Southwest have cut their first-quarter profit and sales estimates, each warning that a weaker economic backdrop is weighing on travel demand.

Rossinyol was speaking alongside Avolta Chief Financial Officer Yves Gerster, as the duo presented the company’s 2024 financial performance. As reported, core turnover last year reached CHF13,473 million (US$15,271 million), up +8.9% year-on-year at constant exchange rates and +6.3% on an organic basis.

Addressing the impact of a potential travel slowdown in the USA – where Avolta and its HMSHost division holds around 33% of the airport retail and food & beverage business – Rossinyol admitted that the market is considerably underperforming compared to other regions in the first two months of this year, with the trend set to continue across March.

“The year-to-date 2025 numbers already include a clear slowdown in the USA,” said Rossinyol. “And despite that, you cannot see those effects in the consolidated numbers because other regions are more than compensating for that.

“Our expectations for the USA are actually better for the second half of the year than for the first half of the year. So we think you could see an acceleration in the country from the pretty low basis in the first two months.

“In January, February, or depending on the weeks you look at, the growth is around +1-2% instead of the +6% [global] average, which means that the other regions have done much better than that. That’s why we are optimistic, because we believe we are already on a certain floor, and going forward, that situation will improve.”

He added that March “is not expected to be a great month”. He continued, “The basis for our optimism is not a feeling. Our teams look at bookings, they look at expectations for the high season, and we believe the behaviour for the remainder of the year would be stronger than the beginning, because the start has been really weak so far.”

Rossinyol said Avolta “is prepared for any eventuality. You need to remember that the two main costs we have are concession fees, which are typically a percentage of sales, and personnel cost,” he explained. “The personnel cost is largely sales forces.

“So if we need to adjust the cost base, as we have done in every place – we have done that in the Middle East last year, we did that in Asia because of the Chinese [spending slowdown], and we will do it in any geography that it needs to be done.

“So even if there is a slowdown on the sales in any geography, our capacity to mitigate that on the returns and on the margins, it’s much higher than in any other type of business.

“Of course we are not 100% hedging on anything that could happen, but we can manage margins even if sales are not exactly as expected. But our forecast is the USA will improve in the second half of the year.”

US market share

Rossinyol addressed Avolta’s share of the airport business in the USA, which has been bolstered by several recent contract gains at key locations, including New York John F. Kennedy International Airport.

“Our US airport market share has been steady at around 32-34% across the past five years. Gaining market share in this business might be relatively easy; keeping a reasonable market share plus providing cash returns is more difficult.

“Our focus is on cash returns, on making sure that we make the necessary bids, on places where we can make the right return. Now, with the wins we are having, probably the market share might increase a little bit, but I’m not going to give you a [target percentage] number, because it’s not what we’re focusing on. The bottom line is what matters.”

Spanish airport contract

Rossinyol was also questioned on the early progress and profitability of Avolta’s commercial contract with Aena for Spanish airports, which was agreed in 2023. He said that two-thirds of store refurbishment work was completed last year, with the remainder to be finished in 2025.

He said, “With the increased offering and increase square metres, we thought Spain could go from negative results to positive results, and over time [move towards] the average profitability of the group.

“We always said it will take two, three years. But we are already on the positive side, and we are ahead of our initial projections. I think the Spanish renewal has been very well done. The relationship with Aena is also excellent at this stage.

“I can confirm that the Spanish concessions are going in line or better than first expected when we signed a new contract a little bit more than a year ago.”

Hybrid store development

Rossinyol fielded questions on the development of hybrid retail/F&B and other new generation stores, and their importance to the Avolta business, also addressing the potential impact on future spend per passenger. Avolta now has hybrid stores at around 20 airports.

“We have the new generation of stores, such as the hybrids. We believe you can increase conversion 10% to 20% in these stores but their growth in the overall portfolio will take time. These stores are already making a difference. We believe hybrids is only one of many other pieces, but they are definitely being developed faster than initially anticipated.

“What was missing in the past is that it’s not enough to try new things – you need to measure them. That’s why it’s so important to combine the entertainment [elements] or the hybrid with the smart store technology – we now have 40 smart stores that use camera analytics and other software that helps to improve the way we manage our shops and restaurants.

“This enables us to measure impact, enables us to see how well it works and then in time extend it to the other operations.

“But definitely, conversion is something that you can address, doing the right things, which might be different in one place than in another.

“My guess is in five years 10 to 20% of the market will include hybrids. But you need the right tender, you need a negotiation, you need the refurbishment. So hybrid growth is not happening overnight, but the trend is clear.”

Club Avolta

Rossinyol also spoke with great enthusiasm about the progress of Avolta’s digital transformation including covering the development of the company’s high-profile loyalty programme, Club Avolta.

Launched in September last year, the programme now has more than 10 million members and covers more than 95% of Avolta’s points-of-sale – more than 5,000 stores.

Rossinyol cited the Dufry merger with Autogrill and the resulting breadth of Avolta’s estate across both retail and F&B as the key force behind Club Avolta’s strong early adoption. He also lauded its ability to supply actionable data.

“We now have more granular data than anybody else in the industry,” he said. “And some 5% of our revenues in 2024 came from Club Avolta users, and the average ticket value for loyalty members is three times the average.

“We have a very clear plan over the next few quarters to keep enhancing this loyalty programme. The start has been clearly ahead of our own expectations.”

Concluding, Rossinyol said, “We are moving in all the key points, in hybrid, in entertainment, in digital transformation, in Club Avolta, in smart stores. In everything we are progressing, but I would still like to move faster.

“We are making significant progress in key areas of the business. And you see that on the organic growth – the last two years have been among the highest, consistently in the history of both of the old Dufry and the old Autogrill – the merger is working.”