VIETNAM. Lotte Duty Free has been awarded an exclusive ten-year duty free concession at Cam Ranh International Airport, Nha Trang. The contract to operate some 1,811sq m of space will begin in the first half of next year and run until mid-2028.
The concession is the South Korean travel retail giant’s second in Vietnam, following the earlier award of a contract at Da Nang Airport. It celebrated the Grand Opening there on 1 November. As with Da Nang, the Nha Trang business will be run by Lotte’s joint venture, Phu Khanh Duty Free, in which it has a 60% holding. Nha Trang will be Lotte Duty Free’s seventh overseas location.
The retailer will offer a typical array of duty free categories in arrivals (174sq m) and departures (1,637sq m). Sales are expected to reach KW700 billion (US$644 million) over the contract term.
Lotte Duty Free CEO Jang Sun-wook said, “Lotte Duty Free will be successful in the Vietnamese market through a combination of differentiated services and Hallyu (Korean wave) star marketing.”
A new, two-storey, 50,000sq m terminal, dedicated entirely to international traffic, is being built at Cam Ranh International to service booming visitor numbers. Lotte Duty Free said that foreign tourist numbers will rise to 2 million in the short term and to 8 million in the long term.
Nha Trang is the largest tourist destination in central Vietnam. The city attracted around 1.2 million foreign visitors last year, and around 1 million in the first half of 2017 alone. The passenger profile suggests potentially high retail spending. Chinese visitors accounted for 57.4% of arrivals last year, followed by Russians at 24.4%. Korean tourism is expected to rise sharply now that low cost carrier Jeju Air has commenced flights to Nha Trang, complementing the existing Korean Air service.
The city of Nha Trang is engaged in a long-term programme to increase tourism. Besides the new airport terminal, several luxury hotels are being built or upgraded. Plans to develop Nha Trang as an international-class resort destination include the expansion of marine leisure facilities in the mid- to long term.
The World Bank projects that Vietnam’s average GDP will grow at around +6% annually until 2020. Oxford Economics forecasts that by 2020 Vietnam’s economy will be growing faster than China, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam expects to double inbound tourism arrivals from over 10 million in 2016 to more than 20 million by 2020.
Lotte Duty Free said it is studying plans to open further stores in Ho Chi Minh City and other major cities in Vietnam over the next three years,
Besides its South Korean operations, Lotte Duty Free trades in Ginza, Tokyo; Kansai International Airport, Osaka; Guam Airport; Jakarta, Indonesia; Bangkok, Thailand; and Da Nang Airport; Vietnam.
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