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Duty-free sales growth may be flat this year in Thailand

Tourism slump affecting King Power

BusinessKing Power Group of Companies, the duty-free shop operator at Suvarnabhumi Airport, expects zero growth in revenue this year as foreign tourist arrivals have dropped sharply amid the global recession. The company forecast revenue of 22 billion baht, the same as last year, which would be the first no-growth year for King Power in two decades. Of the total, Suvarnabhumi duty-free sales would generate revenues of 13 billion baht, the King Power Complex on Rang Nam Road 3 billion baht, souvenir sales 3 billion and hotels and other services 3 billion baht.

Sombat Dechapanichkul, group managing director, said revenues in the first quarter would be 4.5 billion baht, down 20% from earlier projections due to the impact of falling tourist arrivals. “With the sharp revenue decline, we have already submitted a letter to AoT (Airports of Thailand) since January to ask for an exemption of yearly revenue guarantee money. However, the 15% revenue share will remain unchanged,” he said. King Power is still waiting for a response to the exemption request.

The Tourism Authority of Thailand forecast earlier that foreign tourist arrivals could be about 12.7 million this year, roughly the same as last year but down significantly from 14.4 million in 2007 because of political unrest.

Mr Sombat also said that King Power would not benefit much if some domestic flights of Thai Airways International were to be moved to Suvarnabhumi Airport from Don Mueang. “We don’t sell duty-free products to domestic flights,” he said.

In an attempt to revive sales, King Power is increasing its promotional budget by 15-20% to one billion baht to stage the biggest campaign in two decades.

The campaign, called King Power Travel Fair: 20 Must-see Destinations, is running until Sunday at the Rang Nam complex. It is now offering travel packages to 20 new destinations around the world including Kenya (to visit the ancestral home of US President Barack Obama), Santorini Island in Greece and hot springs in Iceland.

More promotion campaigns are planned to encourage more duty-free shopping throughout the year. There are now 400,000 King Power members and the number of new members will not increase much this year.

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