King Power sets Bt12.5 bn for five-year investments
THAI DUTY-FREE company King Power will invest Bt12.5 billion between now and 2021 to achieve sales revenue of Bt140 billion that year, the group’s chief executive officer Aiyawatt Srivaddhanaprabha said.
Up to Bt2.5 billion will be spent this year to renovate its Soi Rangnam branch in Bangkok. The remaining Bt10 billion of the investment budget will be used to expand its outlets in other provinces including Chiang Mai, as well as at U-tapao International Airport, and to develop duty-free businesses overseas, especially in Myanmar and the Philippines.
He said the group’s expansion into the Philippines was being negotiated, while in Myanmar it was waiting for government decision on allowing duty-free shops to be operated by private investors.
At present, the company has 10 duty-free locations in Thailand. Six are in international airports – Don Mueang, Suvarnabhumi, Chiang Mai, Hat Yai, Phuket and U-tapao – while the other four are King Power Complexes at Rangnam in Bangkok, Srivaree in Samut Prakan province, Pattaya in Chon Buri province, and Phuket.
Under the five-year plan, the company aims to be one of the top five duty-free operations in the world. It currently ranks seventh in terms of sales, Aiyawatt said.
If the plan is to be successful, the company has to increase its sales by double digits every year, he said. For 2017, the company targets 20-per-cent growth from last year.
In 2016, the company reported total sales of Bt75 billion, down 15 per cent from the previous year. This was partly attributed to the government’s restrictions on so-called zero-dollar tourism schemes, while there was also a general decline in consumer demand in the final quarter.
However, in the first two months of this year there were signs of a recovery in the duty-free market, and the company is confident that its sales growth will achieve the target this year, Aiyawatt said.
He added that the company was interested in expanding into related businesses linked with tourism, especially the hospitality industry, but this would depend on the emergence of business opportunities.
Last year, King Power Group spent Bt7.94 billion to acquire a 39-per-cent stake in Asia Aviation, operator of budget airline Thai AirAsia.
“Our business strategy with Thai AirAsia is brand cooperation by putting our name on three of the airline’s planes. This is a way to synergise our business,” he said.
The marketing budget for the promotion with Thai AirAsia is Bt100 million. Meanwhile, King Power has not implemented any changes to the Thai AirAsia management team, he said.
King Power is also moving more into online shopping this year, targeting online sales to account for 10 per cent of its total sales value of Bt140 billion in 2021.
“We believed that the trend to shopping online is growing strongly, so we have to expand our business to this channel,” he said.
Currently, 75 per cent of its customers are Thai and Chinese tourists, and the rest from other foreign countries.
