Macau International Airport issues tender for King Power-held duty free concession

MACAU. Macau International Airport has launched a Request for Proposals (RFP) to select one partner for a five-year duty free sub-concession, currently managed by King Power Duty Free (Macau).

King Power resigned the concession after failing to renegotiate terms in a deeply challenging business climate. King Power declined to comment on the development but it’s likely that the company will attempt to regain the concession on improved terms.

Sky Shilla Duty Free Limited (Sky Shilla – a joint venture between Sky Connection of Hong Kong and The Shilla Duty Free of South Korea) and King Power Duty Free (Macau) have held dual duty free services contracts at the airport since November 2014. Before that King Power ran the contract on an exclusive basis since 1995. The RFP signals the start date of the new contract as 1 April 2018.

King Power is a long-term incumbent at Macau International Airport, though it was forced to share the business from late 2014 under a controversial new dual-retailer model. That dilution of revenues has hurt profitability, already under fire due to extremely challenging market conditions.

The stores span 1,130sq m in the South Departure Level. The contract includes shops 5, 6, 7 and 8, which cover liquor & tobacco, candies & souvenirs, general merchandise and international fashion, plus four perfumes & cosmetics kiosks.

Details of the current dual duty free services contract at Macau International Airport and split of space (Source: Macau International Airport Co Ltd)

The bidder is required to build and operate duty free shops and kiosks, including design, layout and concept development. The RFP states that 40% of space should be devoted to liquor & tobacco and perfume & cosmetics, with 60% allocated to general merchandise, confectionery, souvenirs, books, jewellery & watches, branded fashion and electronics.

The RFP covers locations in Area B currently managed by King Power Duty Free (Macau)

The deadline for bids is 28 February. A pre-bid meeting and site tour will take place on 16 January. Interviews with bidders, presentations and notification of selection will be held in March.

The objectives of the RFP as stipulated by Macau International Airport are to: provide world-class duty free services to passengers offering a wide range of products; high-quality facilities and services; provide innovative retail shop concepts and offers at competitive prices; design and furnish the space to a very high standard; increase the friendliness and convenience at the airport; and enhance passengers’ experience through innovative concepts and premium services; and optimise non-aeronautical revenues.

Macau International Airport’s evaluation criteria for the duty free sub-concession opportunity (Source: Macau International Airport Co Ltd)

The full tender documents can be found here.

In 2017, Macau International Airport welcomed over 7.16 million passengers, an +8% increase year-on-year. Traffic to and from Mainland China grew by +15%.

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