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

[snoop1130]

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

by Chayut Setboonsarng

 

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.

 

-- © Copyright Reuters 2019-06-19

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[Bluespunk]

4 minutes ago, snoop1130 said:

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

I'm shocked.

[bdenner]

If I were to list the recipients of the BIG BROWN ENVELOPES l'd be a targeted man.
Apart from the obvious I'm guessing the Minister for watches and all things corrupt is 'close' to the top!

Sent from my SM-G610F using Thailand Forum - Thaivisa mobile app

[ukrules]

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.

 

[Misterwhisper]

31 minutes ago, snoop1130 said:

offered 15.42 billion baht (£392.3 million) in yearly minimum guarantee of revenue without tax

That's roughly twice as much as each of the other two globally active travel retailers, Lotte and Dufry, dared to bid after, it must be assumed, careful calculations based on their decades of industry experience. You are perhaps wondering why King Power was able to tender such an outrageously inflated bid in the first place and without blinking an eye. Well, it's almost risk-free for them because in the end YOU, the traveler, will foot the bill for this so-called "guarantee of revenue." And this "guarantee of revenue" also is not going to be honored at the expense of reduced net profits for King Power, I might add.      

[lungbing]

Oh, no I won't be footing the bill.

[Thechook]

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

[AlexRich]

Thai company wins contract for Thai Airport retail. Bears defecate in the woods. 

[When you know]

Immutable truths: the sun rises in the East and sets in the West; King Power gets the major Thai airport duty-free concessions. Comforting to have these few bastions of bedrock stability in an ever-changing world.

[Damrongsak]

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.

 

 

 

 

[mikebell]

11 hours ago, lungbing said:

Oh, no I won't be footing the bill.

Hear Hear!  A bottle of gin is 30% higher here than in Vietnam; prices checked on the outward & inward journeys.  Guess where I spent my Duty Free allowance.  Hint: it wasn't Thailand.

[Emdog]

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

[Prairieboy]

Duty-free is misleading - there are very few bargains in these shops.  To me, it implies that the price is less than one normally would pay - NOT!  Perhaps the shop owners buy at duty-free prices which then serves to enhance their profit margin.  Often it is cheaper to buy on the street.

Edited June 20, 2019 by Prairieboy

[madmitch]

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.

[Sydebolle]

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

[BobBKK]

With a name like that how could they not? I'm really surprised they are allowed to call the company that to be honest.

Edited June 20, 2019 by BobBKK

[Rawairat]

I was going to say I don't shop at any duty free in Thailand but even an over priced coffee or water will give KP a some profit, they cannot be avoided if you travel. Although I believe you can bring an empty water container in.

It's simple economics they get a monopoly and charge the travellers extra to make a profit. Captive audience and no real competition. Leaves money to buy an expensive football team. Apparently Leicester city do well from the charity donated by KP's owners, which comes from all those travellers pockets. Gives you a warm fuzzy feeling don't it, knowing how charitable we are.

[SOTIRIOS]

.....Re: AOT and the 'goings on' at the airports.....: 'External Audit'......

 

....ever....never...???

[PerkinsCuthbert]

33 minutes ago, SOTIRIOS said:

.....Re: AOT and the 'goings on' at the airports.....: 'External Audit'......

 

....ever....never...???

My money's on the carpet - or rather, what's under it.

[justin case]

why would they give the whole airport to one bidder?  I understand king power has it own shop, but the whole airport, smells like ...

[Jonnapat]

Expect over the top pricing to continue then.

Best to give this a miss snd buy your duty free st the other end.

Most expensive duty free I have yet encountered. 

[Jonnapat]

7 minutes ago, justin case said:

why would they give the whole airport to one bidder?  I understand king power has it own shop, but the whole airport, smells like ...

""Smells like"", exactly 

[Bangkok Barry]

17 hours ago, bdenner said:

If I were to list the recipients of the BIG BROWN ENVELOPES l'd be a targeted man.
Apart from the obvious I'm guessing the Minister for watches and all things corrupt is 'close' to the top!

Sent from my SM-G610F using Thailand Forum - Thaivisa mobile app
 

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.

How would you do business? Accept a lower bid?

[Bangkok Barry]

17 hours ago, bdenner said:

If I were to list the recipients of the BIG BROWN ENVELOPES l'd be a targeted man.
Apart from the obvious I'm guessing the Minister for watches and all things corrupt is 'close' to the top!

Sent from my SM-G610F using Thailand Forum - Thaivisa mobile app
 

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.

How would you do business? Accept a lower bid?

[the guest]

Duty free it is certainly not, it's just another way of leeching as much money out of the tourist before they leave Thailand. You won't find me shopping there ! I can buy cheaper in europe.

[BobBKK]

27 minutes ago, Bangkok Barry said:

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.

How would you do business? Accept a lower bid?

Break up the monopoly obviously as smaller companies don't stand a chance. Anyway I never believe anything they say here.

[spidermike007]

King Power is very well established here. They have been earning a fortune for a long time now, and have a virtual monopoly on duty free. It is not a surprise that they won this bid. 

 

They own the tallest building in Thailand. How on earth were they going to lose this bid?

 

After many delays, the new owner of Mahanakhon skyscraper, duty-free giant King Power, has unveiled the building's 360-degree rooftop observation deck that sits 314 meters above the ground, which is currently Thailand's highest. Dubbed MahaNakhon SkyWalk, the observation triplex of three floors: the indoor observation deck on 74th and 75th, and the rooftop platform and a bar on the 78th floor—of which one of the highlights is the spine-chilling glass-bottomed platform that promises to pump up your adrenaline.    

 

 

Edited June 20, 2019 by spidermike007

[BobBKK]

Just now, spidermike007 said:

King Power is very well established here. They have been earning a fortune for a long time now, and have a virtual monopoly on duty free. It is not a surprise that they won this bid. 

 

They own the tallest building in Thailand. How on earth were they going to lose this bid?

 

After many delays, the new owner of Mahanakhon skyscraper, duty-free giant King Power, has unveiled the building's 360-degree rooftop observation deck that sits 314 meters above the ground, which is currently Thailand's highest. Dubbed MahaNakhon SkyWalk, the observation triplex of three floors: the indoor observation deck on 74th and 75th, and the rooftop platform and a bar on the 78th floor—of which one of the highlights is the spine-chilling glass-bottomed platform that promises to pump up your adrenaline.    

 

 

You must be employed by TAT as your 'love everything Thai' is monotonous bet you love the government too huh? There are a few companies (i.e. families) that own virtually everything in Thainland. there is no fair bidding process, rule of law or anything like that here. It is ALL about their God... money.

[spidermike007]

4 minutes ago, BobBKK said:

You must be employed by TAT as your 'love everything Thai' is monotonous bet you love the government too huh? There are a few companies (i.e. families) that own virtually everything in Thainland. there is no fair bidding process, rule of law or anything like that here. It is ALL about their God... money.

I guess you have never read my posts. Go back and read some of them. Most criticize me for being too critical! I do like some things about Thailand. Perhaps you woke up on the wrong side of the bed this morning? Besides, I was being sarcastic when referring to their monopoly. You could not see that?

 

By the way, as you can see (if you care to look), I absolutely despise the army and the government here. I have plenty of issues with Thailand. Was simply making a comment about alot of the people, who I have affection for. Sorry if that offends you! 

Edited June 20, 2019 by spidermike007

[tlandtday]

1 minute ago, spidermike007 said:

I guess you have never read my posts. Go back and read some of them. Most criticize me for being too critical! I do like some things about Thailand. Perhaps you woke up on the wrong side of the bed this morning? Besides, I was being sarcastic when referring to their monopoly. You could not see that?

 

By the way, as you can see (if you care to look), I absolutely despise the army and the government here. I have plenty of issues with Thailand. Was simply making a comment about alot of the people, who I have affection for. Sorry if that offends you! 

Nothing wrong with constructive criticism and having an opinion there are far too many apologists and wearers of rose colored glasses watching the train come down the tracks.