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GUAM. Long-time incumbent DFS Group faces a triple challenge for the duty free and travel retail concession at A.B.Won Pat International Airport.
The tender attracted four proposals, from DFS, Lotte Duty Free and The Shilla Duty Free from South Korea, and JR Duty Free of Australia, The Moodie Report has confirmed.
The current “˜Specialty Retail Merchandise Concession – Multiple Concepts’ concession expires on 20 January, 2013. The new contract runs for ten years – the first five exclusive and the balance non-exclusive.
All four parties will be interviewed by the airport authority and a decision is expected next month.
DFS will have defended its position strongly in the face of heavyweight opposition. The company pioneered the duty free and travel retail business in Guam and also operates a downtown Galleria in the US unincorporated territory.
Guam is the largest and southernmost of the Mariana Islands and enjoys particularly strong tourism business from Japan, as well as other key travel retail source markets such as South Korea and Taiwan.
Those factors make it a highly attractive target for Korean retail giants Lotte and Shilla while JR Duty Free will have been drawn both by the customer demographic and the location’s relative proximity to Australia.
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Sales under the current concession reached US$34.8 million in the last full financial year |
Recent annual sales by financial year (1 October through 30 September):
FY 2008: US$34,107,734.33
FY2009: US$29,578,461.00
FY2010: US$30,793,206.00
FY2011: US$34,815,148.00
FY2012 (through till May 2012): US$23,781,398.17
Under the terms of the RFP, the winning retailer must pay a minimum annual guaranteed rent (MAG) of US$6 million or above. The percentage rent rate proposed must equal or exceed 25% of gross revenues.
A minimum capital investment of US$250 per square foot is required by the successful bidder.
