CHINA (MACAU). DFS Group will not be bidding on the Macau International Airport duty free tender due to concerns over the splitting of the business into two like-for-like concessions, The Moodie Report understands.
As reported, airport authority Sociedade do Aeroporto Internacional de Macau’s (CAM) this month issued a Request for Proposals (RFP) for the business. The duty free concession is currently run on an exclusive basis by King Power Group (HK) whose contract expires on 6 November, 2014.
The incumbent is likely to face intense competition from the likes of China Duty Free Group, Lotte Duty Free, Sunrise Duty Free, The Shilla Duty Free, Nuance-Watson, Duty Free Americas and Sky Connection with others such as Dufry, Heinemann Asia, LS travel retail, Aer Rianta International and World Duty Free Group all possible contenders.
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Because of its tremendous success in Macau with its downtown stores at The Four Seasons and City of Dreams, DFS was widely considered a likely front-runner for one of the concessions. But The Moodie Report can confirm that the retailer believes an airport of Macau International’s scale (just over five million passengers last year) cannot justify a model involving two operators going head-to-head with similar categories.
DFS knows the dual operator scenario well from Auckland Airport in New Zealand where the duty free contracts are also about to go to tender. As reported, Auckland Airport has chosen to retain its two-operator structure. It probably has little choice given the New Zealand Commerce Commission’s objection in 2008 to the then single operator (DFS) scenario that Auckland Airport had chosen.
Click here to download the RFP.
BACKGROUND TO THE TENDER
Bidders can make offers for either or both concessions but CAM said no one company will be able to operate both.
Responses to the RFP are due by 12:00 noon on 3 June.
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King Power has operated at Macau Airport since 1995 and will face stiff competition for the business; pictured are its liquor & tobacco and fragrances & cosmetics stores |
Each of the winning retailers will renovate and operate a set of shops (Option A, which provides for approximately 1,122sq m, and Option B, which provides for approximately 1,130sq m) under a five-year sub-concession contract.
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CAM said that bidders are expected to present excellent proposals “that offer both exceptional customer service and a wide range of duty free services & products for airport passengers while generating good revenues and superior shop and/or kiosk concepts that reflect the unique characteristics of the Macau Special Administrative Region market.
“Bidders should be experienced, financially sound and able to create unique spaces and retail concepts.”
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The timeline is tight but that won’t deter several major regional and international retailers from bidding |
CAM outlined its key objectives for the RFP process as follows:
– To provide world-class duty free services to passengers at MIA, offering a wide range of products and high quality facilities and services within the space available;
– To provide innovative retail shop concepts and offers at competitive prices;
– To design and furnish the space for operating the duty free shops to a very high standard;
– To increase the friendliness and convenience of MIA, and enhance passengers’ experience through innovative concepts and premium services; and
– To optimise the non-aeronautical revenues of MIA.
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Current overview of Macau Airport duty free shops and kiosks, plus their sizes |
CAM outlined the evaluation criteria for the tender, and the weighting allocated to each. From a total of 1,000 points available, the financial offer will count for a maximum 340. The other criteria include experience and qualifications (150 points), customer service (200), marketing and operational plans (160) and design and proposed capital investment (150).
Passenger traffic at Macau International hit 5.02 million in 2013, sharply up on the 4.49 million of 2012. This remains short of the 2007 peak of recent years, when passenger numbers reached 5.5 million.
The passenger mix will be closely tracked by potential bidders. In 2013 Mainland Chinese dominated the figures, contributing 1.67 million passengers. The second largest nationality by volume was Taiwanese (1.37 million) followed by Thais (887,540).
CAM said that it believed its average passenger duty free spending rates are “substantially higher” than at other airports in Asia Pacific, Europe or the Americas.
Tender documents are now available at the CAM website (www.camacau.com) and MIA website (www.macau-airport.com) until 23:59 on 2 June 2014.
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Retailers can bid on one or both options but CAM will not permit a single operator to run the two concessions |
