Phoenicia leads financial bids at Sharm el Sheikh

Tina Milton

Print Article E-Mail Article E-Mail Author

Lebanese company Phoenicia Trading has tabled the highest financial bid for retail space at Sharm el Sheikh airport, but the airport insists that technical bids will be allocated an equal weighting

Lebanese retailer Phoenicia Trading is the early frontrunner in the tender to operate duty-free at Sharm el Sheikh airport. The company posted the highest financial bid for the contract, though airport authority Egyptian Airports Co was swift to rebut some press reports which it was concerned might suggest that Phoenicia was now certain to win the concession. The landlord told RavenFox.com that the technical bids submitted by the five contenders would be given an equal weighting with the financial bids in the final analysis.

Bidders were asked to submit three proposals, one for the new terminal, one for the current terminal and an offer for the current and new terminal.

The concessions will cover liquor and wines, tobacco, confectionery, fragrances and cosmetics, oriental jewellery, Egyptian cotton and Egyptian wine and food. Bidders were asked to submit a minimum annual guarantee and a percentage of sales revenue, with the landlord to receive whichever is higher.

About 810sq m (8,715sq ft) of duty-free space is available in the international departures area of the existing terminal, while 70sq m (753sq ft) has been allocated for arrivals duty-fee. The new terminal will contain 780sq m (8,392sq ft) in departures and 70sq m in arrivals.

Phoenicia is understood to have submitted the highest bid to run duty-free in the new terminal, offering a minimum annual guarantee of $48.5m over five years, starting at $8m in year one and rising to $11.5m in the final year. This was ahead of the incumbent Egyptair Tax Free Shops (with its retail consultant Aer Rianta International-Middle East) which offered $45m over the full contract period.

Aldeasa tabled a bid of $21.1m, Cairo Airport Duty Free (a subsidiary of the Chalhoub Group) offered $19.1m and Dufry Group submitted $18.7m.

Egyptair/ARI-ME lead the offers in percentage sales terms, offering 34.1% each year. Aldeasa gave a starting rate of 31% growing to 33%; Dufry tabled 31% per year; Phoenicia offered 30% and Cairo Airport Duty Free offered 25% increasing to 27%.

Phoenicia also topped the bids for Sharm el Sheikh's existing terminal, tabling a minimum annual guarantee of $42.4m over five years, starting at $7m in year one and increasing to $10.1m in the final year. Cairo Airport Duty Free offered $20.95m and Egyptair submitted $18.8m. Dufry Group bid $15.7m and Aldeasa $13.6m.

In its bid for the existing terminal Dufry Group offered an annual percentage of sales of 31% each year, topping Phoenicia's bid of 29%. This was followed by Aldeasa, with 28% rising to 30%; Egyptair with 27.5%; and Cairo Airport Duty Free with 26% rising to 28%.

In its offer for both terminals Phoenicia again led the bidding with a minimum annual guarantee of $97m over five years, growing from $16m initially to $23m in year five. This was ahead of the offer from International Duty Free Agencies--in partnership with Gebr Heinemann--which offered $76.4m. Egyptair followed with $76m, Cairo Airport Duty Free offered $43.3m, Aldeasa $35.5m and Dufry $34.4m.

International Duty Free Agencies/Gebr Heinemann offered 39.3% of its sales, exceeding Egyptair's submission of 34.1%. Phoenicia and Dufry both offered 31%; Aldeasa tabled 30.5% rising to 32.5%; and Cairo Airport Duty Free offered 28.3% increasing to 29.3%.

Egyptian Airports Company confirmed that a winner had yet to be selected but said a decision would be made over the next few weeks. Financial and administrative director Denys Bourguignat said: "The process include two parts of equal importance; the technical offer and the financial offer. The decision will not be made solely on the financial bid."