DFS retains Honolulu duty-free concession UPDATED

Gavin Lipsith

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The group is the sole bidder for the five-year contract to operate duty-free at Honolulu International airport.

DFS Group is to run airport and downtown duty-free stores in Hawaii until at least 2012 after being the sole bidder in a tender issued by the Hawaii Department of Transportation (HDOT). 

DFS group vice-president business development Sharon Weiner confirmed: "Our bid, the minimum allowable, was $38m for each of the five years [of the contract] totalling $190m. The bid is for the period June 1, 2007 through May 31 2012 and may extend for another five years to May 31, 2017, pending additional government approval."

The contract, which is under review by HDOT requires the retailer to invest at least $1.75m in its airport stores. Reports indicate the retailer would now spend $40m on renovating its Waikiki Galleria, including the introduction of new luxury brands.

Hawaii suffered a 8.9% drop in the number of Japanese tourists for the year to the end of November 2006, and visitors, which account for 90% of DFS sales in Hawaii, appeared to be more conservative in their spending than they were previously.

“While Japanese arrivals and spending are not where we hoped that they would be right now, we believe that there will be a substantial improvement in the near future," Weiner told the Honolulu Advertiser. "In addition, we have been told that the US might consider a visa waiver programme for South Korea in the next couple of years. And, we are seeing an increasing number of high-spending customers from China and Taiwan."

DFS was also the only bidder for the concession in 1996, 2001 and 2003, when it was granted a rebid for the remaining 32 months of its five-year contract, since extended to May 2007.