[Exclusive] Grand Tourist Hotel Selected for Duty-Free Shop at Gimpo International Airport Arrival Hall

Korea Airports Corporation Selected as Preferred Negotiation Partner
5-Year Lease Operation Upon Customs Approval
COVID-19 Remains a Variable... Start Date Undecided

Grand Duty Free Incheon Airport Branch

[Asia Economy Reporter Cha Min-young] The operating rights for the duty-free shop in the arrival hall of Gimpo International Airport have been awarded to Grand Tourism Hotel, which operates Grand Duty Free. However, due to the ongoing COVID-19 pandemic, it is expected to take some time before normal operations commence.

According to the duty-free industry on the 26th, Korea Airports Corporation selected Grand Tourism Hotel as the preferred negotiator for the public bidding of the Gimpo International Airport arrival hall duty-free shop on the 22nd. If Grand Tourism Hotel obtains approval from the Korea Customs Service, it will lease and operate the duty-free shop for the next five years. Entas Duty Free also participated in the bidding but was unsuccessful.

The arrival hall duty-free shop will be located on the first floor of the international arrivals hall at Gimpo International Airport, covering an area of 200㎡. The product range includes all items such as duty-free liquor, perfume, cosmetics, tobacco, and others. The corporation proposed an expected annual sales amount of 1.86 billion KRW and a minimum acceptable operating rate of 23.2%. Duty-free operators must submit a rental fee based on an operating rate higher than this. Korea Airports Corporation exempts fixed rent and charges rent linked to sales.

The arrival hall duty-free shop is a special bonded sales outlet designed to allow Korean nationals returning from travel to conveniently purchase products on their way home. It was first introduced at Incheon International Airport on May 31 last year. This was established to resolve the inconvenience of having to carry duty-free goods purchased on the outbound trip throughout the journey and to shift overseas consumption back to the domestic market. It also helps disperse crowds that gather at the duty-free delivery counters before departure, which was a benefit before the COVID-19 outbreak.

Grand Tourism Hotel, a small and medium-sized duty-free company, operates internet duty-free shops, Jeju Air in-flight shops, as well as downtown duty-free shops in Daegu, Daegu International Airport, and Incheon International Airport. The Gimpo International Airport arrival hall duty-free shop is likely to start operations by the end of this year or early next year, but this may vary depending on COVID-19 developments.

However, the domestic duty-free industry is facing a crisis due to the ongoing COVID-19 situation since the beginning of the year. According to the Korea Duty Free Association, the number of visitors to domestic duty-free shops in April dropped by about 40% compared to the previous month, totaling around 350,000. Monthly total sales also fell below the 1 trillion KRW mark to 986.7 billion KRW. A positive sign is that the aviation industry is showing signs of resuming international flights. Korean Air announced plans to expand its international routes in June from 13 routes and 55 weekly flights in May to 32 routes and 146 weekly flights. The target regions include the Americas, Europe, and Southeast Asia.

A duty-free industry official said, "At the earliest, movements toward returning to normal levels in the duty-free industry are expected after mid-July this year," adding, "Some daigou (Chinese personal shoppers) are currently active mainly in a few downtown duty-free shops, but the situation is not easy."