King Power is spending more than 500 million baht to build a duty-free emporium in the eastern resort city of Pattaya, aiming almost exclusively to tap the spending spree among Chinese and Russian visitors.
Construction of the facility, which was previously delayed by the political turmoil in 2009, has recently begun in earnest for an opening as soon as September this year.
The duty-free store, covering 20 rai in Pattaya Klang, will boast a retail area of 5,000 square metres and will be the latest addition to the growing chain of the Thai travel retail giant.
“Pattaya has been on our radar screen for a while but negative factors like the domestic political situation and the downturn in the global economic situation prevented us from launching the store until late last year,” explained King Power group deputy chairman Chulchit Bunyaketu.
A surge in tourist arrivals to Thailand, particularly those from mainland China and Russia, that started last year, as well as the popularity of Pattaya as a destination among them, has encouraged King Power to quickly activate the Pattaya project.
About half of the Chinese arrivals goes straight to Pattaya while the other half combines Pattaya and Bangkok on their Thai itinerary.
Chinese and Russian tourists are coming to Thailand and Pattaya in great numbers with disposable income and the strong propensity to spend, Mr Chulchit told the Bangkok Post.
“Their (Chinese) spending behaviour is like what Thais did in the old days when they visited Hong Kong – buying everything in front of us,” he explained.
Chinese tourists’ spending spree can be witnessed by the size of purchases at King Power’s flagship sites – Suvarnabhumi Airport and the King Power Complex on Bangkok’s Rangnam Road.
The average purchase per invoice rose to about 5,000 baht, compared to about 3,000 baht in the 2009 Lunar New Year, according to Mr Chulchit.
The improved business environment enabled King Power to record revenues of 22 billion baht last year with 25 billion baht expected this year.
Pattaya will be third largest store in King Power’s chain in terms of commercial space, after Suvarnabhumi (17,000 sq m) and Rangnam (10,000 sq m).
Other duty-free stores operated by the privately owned company are in Chiang Mai and Phuket International Airports.
King Power closed its duty-free shop at Hat Yai airport due to poor business.
Chinese are the second largest client group of King Power, after Thais.
The contribution of Chinese buyers to the company’s total 2010 revenue was 15% compared to 26.7% by Thais.
“It is likely that we see the percentage of Chinese reaching 20% this year,” noted the former senior executive of Thai Oil.
King Power Pattaya, with frontage of 80 metres and 400 metres in depth, will offer goods appealing especially to Chinese and Russian visitors.
High on the Chinese shopping lists at King Power are, in order, cosmetics including perfume, liquor, packaged food and leather goods.
Among the luxury brands popular among the Chinese are Omega, Rolex, Chanel and Dunhill, according to Mr Chulchit.
With the rise in patronage by Chinese buyers, King Power may open a second Bangkok downtown duty-free emporium, he said, without elaborating.