Our Value Creation Strategy Our Performance Our Governance Additional Information 111 OPERATIONAL REVIEW During the year, Group worked alongside tenants to complete the necessary preparatory work to enable them to begin operating at the premises in the shortest possible timeframe. This included workflow improvements to reduce the lead time for the tender process by using an online tender process, ‘E-Procure’. A ‘Fit In-Fit Out’ team was also formed to assist tenants with the renovation of the premises and to enable the various stages of the fit out works to progress smoothly. In addition, the opening of the outlets was also timed to match the pace of recovery in air traffic at the respective airports to balance between the potential sales volume for tenants and the availability of commercial offerings such as retail, food and beverage and other services to passengers. We were pleased that tenants were prepared to begin operations prior to passenger volumes reaching the threshold of 50% of the pre-pandemic passenger volume in 2019. For example. the success of the beachheads initiated by Costa Coffee and The Refinery at KUL Terminal 2 had motivated other tenants to follow suit. By the end of 2023, 88% of the lettable commercial space at the airports had been leased out. The Group achieved an operational occupancy rate 81%, surpassing the pre-pandemic level of 79% in 2019. Boost operational occupancy of commercial spaces RENTAL AND ROYALTIES stood at 81% by the end of 2023 compared to 55% in Q1 2023, and higher turnover aided by the strong recovery in passenger movements, in particular international passengers in 2023. The return of tourists from Mainland China was also a driver for revenues in this segment. Rental and royalties at SAW grew 29.3% YoY with a total revenue contribution of RM622.5 million. This includes revenue generated from SAW’s duty free business of RM371.3 million which is 27.2% higher YoY. In addition to continued efforts by Dufry, the world’s largest duty free airport operator which operates the travel retail offerings at SAW, the growth in international passengers at SAW was also a key driving factor. Malaysia Airports also revitalised its essential commercial offerings, namely retail and food and beverage (F&B). In terms of retail offerings, the Group has recruited new retail brands to heighten the airport shopping experience. Retail brands that opened new stores KUL Terminal 1 include fresh new concepts from Polo Ralph Lauren, Michael Kors, Bulgari, Tory Revitalise essential commercial offerings
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