TAIWAN. The duty free tender for Taiwan Taoyuan International Airport Terminal 2 is likely to be released soon after Chinese New Year (16 February), The Moodie Davitt Report understands.
As reported, the two contracts on offer will run for 12 years with three-year extensions subject to “outstanding” performance.
The incumbents for the T2 zones C and D concessions are Tasa Meng Corporation (North Gate D) and Everrich Duty Free (South Gate C). Besides the long-established duo, parties to have expressed interest include Dufry, DFS Group, Lotte Duty Free, and Shinsegae Duty Free.
The T2 south side business covers 25,400sq m of space, embracing the departures corridor and the C zone concourse. The T2 north side includes the departures corridor, and D zone concourse, involving around 31,900sq m.
The tender model is unique to Taiwan. Its public/private partnership (PPP) basis means that the winning retailers are also responsible for funding and managing other airport activities, including washrooms, information counters, boarding gate rooms, smoking lounges and others (see below for more details).
The successful bidders have the right to set up a downtown shop with airport pick-up (as Ever Rich already does).
According to local media reports, Taoyuan International Airport is seeking a sharp hike in minimum monthly guarantees from the new contracts.
Mainland tourism decline in 2016 and 2017 – but are better days coming?
Retail results at the airport will be heavily affected by what happens in Taiwan’s tourism industry. The sector was hit badly by a sharp decrease in Mainland Chinese visitors last year and heavily reduced spending.
The Chinese government restricted travel to the island after Taiwan’s ruling pro-independence Democratic Progressive Party, led by Tsai Ing-wen, came to power in May 2016. According to Nikkei Asian Review, during the eight years under the previous, pro-mainland leadership of Ma Ying-jeou of the Nationalist Party, Mainland Chinese arrivals grew more than tenfold.
“Chinese arrivals then [after the change of government] took a nosedive,” noted Jing Travel with which The Moodie Davitt Report works closely. Chinese arrivals for the year to November 2017 reached around 2.7 million, down by around -25%.
However, Jing Travel noted an +11% year-on-year rise in Mainland arrivals for the August to November 2017 period, in what may signal a PRC policy change. The uplift followed 16 consecutive months of decline. The October and November gains both exceeded +20%.
Better times might be coming for Taiwan’s tourism sector, says Jing Travel. Unlike South Korea, which has remained dangerously over-exposed to the Chinese market (and suffered badly from that imbalance in 2017 due to the THAAD row), Taiwan has successfully attracted strong numbers from other nationalities, notably South Koreans.
According to Taiwan News, the government hopes for a +9% increase in visitor arrivals this year.
Besides the traditional duty free operations, the winning concessionaire/s will sell or operate:
• Multicultural and ‘creativity’ merchandise and museum shops
• Food & beverage
In keeping with Taoyuan Airport Corporation’s strong Corporate Social Responsibility ethic, the winners must provide job opportunities for the disabled.
They must also operate certain airport public services:
* Passenger inquiries
* IC product information
* Interactive family playgrounds
* Nursing rooms
* Outdoor smoking areas
* ‘Barrier-free facilities planning’
* Shopping trolleys
* Cultural galleries
* Thematic boarding lounges
The concessionaires will also be in charge of public signage related to their respective areas of responsibility; toilet renovation and maintenance; and prayer rooms.
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