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BANGKOK 19 July 2019 03:02
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Thailand's King Power wins duty-free retailer auction for major airports

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Thailand's King Power wins duty-free retailer auction for major airports

by Chayut Setboonsarng

 

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FILE PHOTO: The headquarters of King Power Group, the nation's largest duty free retailer, is seen in Bangkok, Thailand April 28, 2016. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Airports of Thailand Pcl (AOT) on Wednesday approved King Power Group’s $494 million (£393.3 million) bids for duty-free retailing at its major airports over rival contenders, including a group of South Korea’s Lotte and Bangkok Airways Pcl.

 

The hotly-contested auction had lured international bidders seeking to benefit from Thailand’s booming duty-free industry on growing tourist numbers, and powered airport operator AOT’s revenue growth.

 

Tourist receipts account for about 12% of the second-largest economy in Southeast Asia, making it one of the most important drivers of growth, and in 2018, the country saw more than 38 million visitor arrivals, according to Thai government data.

 

Unlisted King Power Duty Free won two duty-free concession contracts and retail concessions at four major Thai airports, including the country’s main international airport Suvarnabhumi, AOT said in a statement.

 

Its winning bids came less than a year after its founder Vichai Srivaddhanaprabha died in a helicopter crash in a helicopter crash outside the stadium of the Leicester City Football Club, that he owned. His death led to analysts questioning the future of King Power’s franchise.

 

King Power, which retains ownership of Leicester City club, offered 15.42 billion baht (£392.3 million) in yearly minimum guarantee of revenue without tax, topping the Lotte and Bangkok Airways consortium’s 8.52 billion baht bid, AOT said.

 

Another group - the Royal Orchid Hotel Pcl and WDFG UK, a unit from travel retailer Dufry — made an offer for 7.26 billion baht.

 

For a separate concession contract for three major regional international airports in Hat Yai, Phuket, and Chiang Mai, King Power also outbit its rivals by offering 2.33 billion baht.

 

It also won a licence to operate commercial services such as restaurants and shops at all four airports, beating local retail giant Central Pattana with an offer for a yearly minimum revenue of 5.8 billion baht.

 

King Power’s current duty-free concession at Suvarnabhumi airport is set to expire in 2020, and the new concession will expire in March 2031.

 

AOT, Thailand’s second biggest company by market value, reported a 13% rise in concession revenue to 16.7 billion baht in the last fiscal year.

 

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-- © Copyright Reuters 2019-06-19
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11 hours ago, ukrules said:

Why do they run it in such an 'all or nothing' kind of way? This is not a normal way to conduct business.

 

They should allow any company to operate inside the airports and make them bid for their plots with multiple companies allowed in.

 

Zero competition is never a good idea.

 

Oh, come on.  If they had dozens of companies, the eventual recipients up top would have to hire dozens upon dozens of mail-room clerks to open the brown envelopes and sort it all out. Direct deposit into a numbered account in an unnamed country is the way to go.

 

 

 

 

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4 hours ago, Thechook said:

They are so bloody expensive it's a joke.  Stop calling it duty free because it definately is not.

It may be "duty free" but sure as heck any savings in duty are just added to the obscene profits that can be made in a monopoly selling situation. That 494 million bucks for bid fair indicator just how obscene those profits can be

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15 hours ago, ukrules said:

Why do they run it in such an 'all or nothing' kind of way? This is not a normal way to conduct business.

 

They should allow any company to operate inside the airports and make them bid for their plots with multiple companies allowed in.

 

Zero competition is never a good idea.

 

But with KIng Power also winning the rights to control the entire airport area, I still think there would only be one winner.

 

I've often referred to Thailand as the hub of monopolies and King Power's hold over the airports is probably the best example of all.

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Surprise surprise - wonders never seize .......

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