The Middle East travel retail market is experiencing its sharpest contraction since the pandemic as a result of the US–Israel attack on Iran on February 28. Beauty is the mainstay category in airports across the Gulf, and therefore heavily affected, but brands will have to play a long game as the region recovers.
According to Generation Research, which tracks the duty-free channel, the Middle East accounted for 9.5% of the global $76 billion racked up in 2025. However, in the Gulf Cooperation Council (GCC) states, beauty sales have plummeted. A spokesperson at the analyst told BeautyMatter, “January was well ahead of 2025, while February was slightly below. However, March and April sales were below half of 2025 levels."
May showed a recovery, but for January to May 2026, Generation estimates GCC beauty to be down by roughly 30% to 35% versus the same period in 2025. This is not surprising given the devastation wrought so far.
Ever since the conflict began, two vital sectors have been ravaged: travel and tourism. Both underpin airport duty-free shopping. At the time of writing, a short-term deal between Iran and the Trump administration had been signed, but Israel was not a party to the memorandum of understanding (MOU). This leaves the situation not fully resolved.
At the height of the crisis, Iran targeted US military bases across the GCC, some of them in close proximity to civilian gateways. Global hubs such as Dubai International (DXB) in the United Arab Emirates (UAE)—the world’s busiest international gateway with 95.2 million passengers in 2025—and Qatar’s Hamad International (DOH), among others, were badly affected when governments closed their airspace.
DXB’s duty-free retailer, Dubai Duty Free (DDF), alone achieved almost $440 million in perfume sales last year.
Typical daily GCC scheduled departures across the six GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE) are estimated to be about 2,000 to 3,000 and at the peak of the conflict, roughly 25%-35% of flights were grounded.
Aviation conditions are stabilizing as large airlines like Emirates and Qatar Airways rebuild their networks—helped by the military focus moving to shipping in the Strait of Hormuz. Yet a serious strike in early June at Kuwait Airport showed just how volatile the situation remains.
Airports in the region have been tight-lipped about impacts to them, as have duty-free retailers, preferring to concentrate on the positives of how flights are resuming, perhaps exemplified best by the return of 96% of Emirates capacity.
However, more flights do not mean more passengers/shoppers, and the scars of recent months continue to run deep. The Duty Free World Council (DFWC)—the global voice for the travel retail industry—has admitted the conflict “is having a significant impact on our industry in the region, but also far beyond.”
Philippe Fontalba, who has previously held high-level positions with the Chalhoub Group and Lagardère Travel Retail, told BeautyMatter, “Tourists are the first to leave in a crisis and they’re also the highest discretionary spenders in any airport retail environment. Business travel was already in structural decline before any of this started. What's left are people who have to travel—for family visits and obligations. That traveler doesn’t tend to convert.”
The situation was bad enough for Gulf bellwether DDF to stop sending out monthly sales updates, and, at the time of writing, was yet to resume the activity. Dubai Airports, which runs DXB, also did not issue traffic figures for Q1.
DDF is, by far, the largest duty-free retailer in the Gulf, ahead of Qatar Duty Free, which operates at DOH. Revenue at DDF hit $2.38 billion in 2025, up 9.9% year over year (YoY), the most successful year in the retailer’s 42-year history. Perfumes delivered 18.4% of the pie, making it the biggest category. DDF’s last update put total January sales at $235 million of which $40.3 million came from the very buoyant perfumes segment.
The world’s largest travel retailer, Avolta (formerly Dufry), was the first to clarify the extent of the crisis in early March, when CEO Xavier Rossinyol downplayed the situation by noting that the Middle East accounts for just 3% of the group’s global revenue. Beauty accounts for 19% of the company’s sales—the biggest share of any category excluding the merged Autogrill food and beverage business.
Later, when the retailer published its Q1 results in May reflecting the March downturn in the region, it said organic growth of 4.7% would have been 5.9% had it not been for the Iran conflict. The effect was evident in Avolta’s Europe, Middle East, and Africa (EMEA) region, which had the weakest growth of 2.5%, lagging North America (up 3.9%).
In mid-April, France’s Lagardère Travel Retail (LTR) reported its Q1 results. Arnaud Lagardère, CEO of parent company Lagardère SA, commented, “The Middle East weighed on air traffic and consumer spending in Q1, but it is too early to say how the situation will evolve.” Like all big duty-free operators, Lagardère is relying on a diversified geographic footprints for mitigation.
For Gebr. Heinemann, exposure in the Gulf is limited even though its division, MEA and Turkey, accounted for 36% of the company’s $5.5 billion revenue in 2025. This is chiefly due to large retail operations at Istanbul and Tel Aviv airports, its top two sales locations.
Heinemann has opened an office in Dubai to tap the Gulf and Africa, and unveiled a joint venture retail operation in Saudi Arabia’s Jeddah Airport last year. Commenting on the future of the region, Heinemann’s Co-CEO Max Heinemann said, “We have to look beyond the current geopolitics right now because we are not scaling back our efforts. The Middle East is a vital area.”
In terms of hard figures, a mid-May analysis by regional airports association, Airports Council International (ACI) World Asia–Pacific and Middle East, has put losses during the two months of March and April at between $900 million and $1 billion due to a passenger shortfall of 27 million. This was based on an analysis of nine of the largest airports in the region including Abu Dhabi, Doha, Dubai, Jeddah, and Riyadh. Between them, they handled 324 million passengers in 2025, representing about 70% of all Middle East traffic.
The amount and shortfall were described by ACI as “of exceptional magnitude” with serious implications for duty-free sales. ACI puts the total retail loss at $100 million across the airports over the two months, driven by a specific decline in high-spending transit passengers. The Gulf normally accounts for 14% of global international transfer traffic, so airports in the region tend to be highly reliant on retail income.
Slava Cheglatonyev, Senior Director of Economic Policy and Airport Business at ACI World notes also that when it comes to non-aeronautical revenue, retail concessions account for 39% in the Asia–Pacific/Middle East/Africa region, significantly above the world average of 23.1%. Moreover, beauty typically has a bigger slice in the Middle East as the wine and spirits category can be absent or limited due to cultural norms.
Beauty multinationals have commented on the Gulf, however, none have talked specifically about duty-free. In April, L’Oréal said consumption in the Middle East has been impacted “notably in the UAE, while Saudi Arabia has been resilient.”
In early May, Estée Lauder Companies claimed the impact of business disruptions in the Middle East would be less than 1% for its full fiscal year (ending June), while Coty noted how the regional crisis was weighing on sell-in and sales, with EMEA down 2% to $597.6 million in its fiscal Q3 2026 (ended March 31). In mid-May, Shiseido said it could “absorb the increased cost for raw materials and logistics” arising from the conflict.
Like diversified duty-free operators, travel retail divisions of beauty houses have been able to offset in other geographies. While air traffic (i.e., potential duty-free shoppers) in the Middle East collapsed by 13% YoY in Q1, it has remained resilient elsewhere: from a weak 0.5% in North America to 8.4% in Africa. Referencing the Q1 Middle East decline in a June webinar hosted by DFWC, ACI’s Cheglatonyev said, “This does not appear to be a short-term disruption.”
The contraction forced ACI World to recalculate its traffic forecast for 2026. From 10.2 billion passengers, the figure was revised down to 10 billion. At a global level that means 200 million fewer passengers—and already 27 million of those were lost in March and April across just nine Middle East hubs.
In the early weeks of the conflict, Oxford Economics’ tourism arm, Tourism Economics, indicated that Middle East arrivals could end the year down by as much as 27% compared to its December forecast that projected 13% growth. This translates to a loss in visitor spending of between $34 billion and $56 billion.
June–July airfares are about 50% above the prior year in and out of the region, so traffic is likely to remain subdued, even as airlines restore their networks and frequencies. Abdeslam Agzoul, President of the Middle East & Africa Duty Free Association (MEADFA), and Avolta’s Middle East and Africa CEO, commented frankly. “The recovery, if it is sustained, is fragile to say the least. If air fares continue to rise, and air travel becomes available only to a privileged few, then our ability to increase sales will be impacted.”
As well as worries over the large reductions in shopper volumes and spending habits, travel retailers in the Gulf are suffering from major supply chain disruptions, as alluded to by Shiseido. Agzoul said, “Getting products from A to B has become extremely expensive, time-consuming, and sometimes close to impossible. The industry is working tirelessly to find solutions.”
The regional CEO called for more innovative ideas for overcoming the new logistics barriers and “a high level of agility.” The use of smaller and mid-size ports, plus a shift to road and rail, has become necessary under the circumstances.
Agzoul added that the typical airport concession model based on a minimum annual guarantee was “inappropriate in a time of crisis” and that “there is a need for flexibility on all sides.” More positively, the conditions have led to tighter partnerships between airport landlords, retailers, and beauty brands. The MEADFA President added, “I’m hopeful that we’ll see a recovery in the second half, but it will be gradual.”
ACI and Tourism Economics agree, believing no rapid rebuild is in sight. Instead a “swoosh-shaped” trajectory—a slow initial rebound followed by a longer, step-by-step climb back to baseline is the prediction.
Going forward, the criteria that will affect beauty sales in duty-free outlets the most are likely to be the cost of tickets and how travelers perceive safety in the Gulf. Even if the MOU between the US and Iran holds up, any signs of volatility will convince them to switch destinations and travel elsewhere.
Gulf airports need to retain their position as a vital node in global transfer traffic. In 2025, almost 200 million passengers traveled between Asia–Pacific and western destinations, equivalent to 540,000 passengers daily. About 18% of those were connecting through affected hubs in the Middle East.
High-spending transit passengers have been rerouting from the Gulf via large hubs like Istanbul Airport, for example, where shopping is booming—and their return is not guaranteed. Heinemann Co-CEO Raoul Spanger also noted that while key hubs in the Middle East “still play a major role in shaping international travel flows, new-generation aircraft are enabling long-haul, point-to-point travel.” This is creating new travel corridors.
Bigger airports should have the scale to attract passengers back. And Fontalba believes that beauty and fragrance will hold up better than most. He said, “Prices in beauty still work for travelers; that's not necessarily true for a $400 belt or a $600 wallet. But it only works if the offer gives them a reason to stop. Exclusives, a tighter edit, a bit of theater … the operators who get that right will protect their numbers. The ones still relying on volume to carry them are going to get hurt.” His fix, at the store level, is simple. “Shrink the assortment, make the exclusive count, and train the teams to sell in three minutes not thirty.”
At the macro level, the airport, airline, and duty-free ecosystem has been resilient in the wake of global events—the 1990s Asian economic crisis, two Gulf Wars, 9/11, Icelandic volcanic ash cloud, and the COVID pandemic. Travelers are looking for a clear fix to the current conflict but even then, the return to normality looks like it will be painful.
