Thailand's King Power loses retail bid in U-Tapao airport concession

Lotte

19/11/2018 09:28

BANGKOK, Nov 19 (Reuters) - Thailand's Central Group and DFS
Venture Singapore snapped up retail and services concession at
an upcoming airport in the eastern province of Rayong, a
government official said on Monday, beating out duty-free giant
King Power  KPDUT.UL .
    The announcement underlines the challenges King Power is
facing as its dominance of the lucrative Thai duty-free and
travel retail industry comes under scrutiny, at a time when it
is also trying to recover from the recent death of its chairman,
Vichai Srivaddhanaprabha, in a helicopter crash.  urn:newsml:reuters.com:*:nL8N1X809L
    "Central Group won the retail and services auction while
King Power won the bid for duty-free," Vice Admiral Luechai
Sri-eamgool, director of U-Tapao International Airport, said.
    U-Tapao is the first airport in Thailand to hold an auction
with multiple concessions, splitting up duty free and retail
operations. Up until now, King Power has enjoyed near monopoly,
being a sole operator with concessions in all major airports.
    King Power's most lucrative franchise in Thailand's main
international airport is under a single license that is set to
expire in 2020. Auctions for concessions at Suvarnabhumi are
slated to take place later this year. 
    Airports of Thailand Pcl  AOT.BK , a state-owned firm that
grants the concessions at major airports including Suvarnabhumi,
may consider multiple concessions at the auction, analysts say,
increasing competition among retailers. 
    Tourism is booming in Thailand, which received nearly 35
million visitors last year, most funnelled through the airports
where King Power is ubiquitous. But public debate has increased
over the single duty-free operator structure.
    Bidders in the U-Tapao concession included Thailand's Minor
International  MINT.BK  and Korea's Lotte Duty Free  004990.KS .
    Under the 10-year concessions for retail, service and duty
free at U-Tapao, operators must share at least 15 percent of
their revenue with the government or the minimum guaranteed
amount, whichever is higher, Vice Admiral Luechai said.
    "The results will be submitted to the defence minister for
approval with commercial activity to begin February 2018."
    King Power, which owns Leicester City football club, did not
immediately respond to a request for comment from Reuters. 
    Yuwadee Chirathivat, chairman of Central Department Store,
Central Group's largest unit, said the consortium "was
delighted" that the winning bidder would also be responsible for
counters where tourists can pick up duty-free items bought
outside the airport. 
    While U-Tapao is smaller than Suvarnabhumi and Don Muang
airports, upgrading the Vietnam War-era airport is at the centre
of the government's industrial policy in the east. 
    It remains a quiet airport with weekly international flights
mainly to China, its website shows. 
    Bidding for a $6.8 billion high-speed rail project to link
Suvarnabhumi, Don Muang and U-Tapao is underway.  urn:newsml:reuters.com:*:nL4N1XN3OX  

 (Reporting by Panarat Thepgumpanat and Chayut Setboonsarng;
Editing by Kanupriya Kapoor and Himani Sarkar)
 ((Chayut.Setboonsarng@thomsonreuters.com; +6626506126; Reuters
Messaging: chayut.setboonsarng.thomsonreuters.com@reuters.net))