Hotel Lotte has offered $244.7m over three years for the duty free liquor and tobacco concession at Singapore Changi Airport, just ahead of the $242.1m offered by incumbent operator DFS Venture Singapore.

Lotte offered a straight minimum monthly guarantee of S$10,486,000; ($6,821,882) for the three years of the contract, compared with DFS' minimum monthly guarantee of: (i) S$10,166,667 ($6,612,853 ) for Year 1; (ii) S$10,333,333 ($6,722,344.75) for Year 2; and (iii) S$10,500,000 ($6,830,990) for Year 3.
Put simply and in summary, the bids over three years were as follows:

Bidding table:

1. Hotel Lotte: S$.377,496,000 ($245,721,289)
2. DFS Venture: S$.371,999.990 ($242,104,119)
3. Sky Connection: S$.334,836,000 ($217,919,852)
4. Nuance Watson: S$300,000,000 ($195,268,484)
5. Aelia SAS: S$.291,600,000 ($189,795,243)
6. Aldeasa: S$.186,708.990 ($121,542,824)

Based on minimum monthly offer guarantees over 36 months. (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

It is now well documented (mainly by The Business) that the Civil Aviation Authority of Singapore (CAAS) has created a super tender for this business, which includes several duty free departure and arrivals shops across four terminals (1,2,3 and the Budget Terminal).

The total retail space on offer in this new tender actually equates to approximately 5,214sq m across all four terminals.

As already exclusively reported, the Civil Aviation Authority of Singapore (CAAS) has also locked the minimum monthly guarantee (MMG) into the passenger base year of 2005 when there were 32,431,000 passengers.

This means that whatever growth there is in passengers in 2008 over 2005 will translate into a higher MMG that is payable to CAAS. So simplistically, if passenger numbers are 10% over the 2005 base level, then the operator's MMG will be factored up by 10% for that particular period payable on a monthly-arrears basis. It is also obviously cumulative, so year 2009 and also 2010 – the final year of the concession – will also be measured against the 2005 base figure. (See 'Complex Changi L&T bid' in our search engine for the most accurate description and analysis of the full bid criteria).

As already reported exclusively, DFS Group achieved duty free sales of S$242m ($157.4m) in 2005 at Singapore Changi Airport and S$226m in the 11 months to the end of November 2006 ahead of the tender for this business.

The new contract is expected to begin on February 1 2008, even though the original schedule indicated a start date of January 1 2008. The tenancy term of the contract is for three years with an option to extend for a period of a further two years at the discretion of the airport authority.

The Business reliably understands that the top three bidders will now be invited to make individual presentations to CAAS management. However, the close proximity of the Chinese New Year celebrations means that there probably will not be any declared result for another three weeks.

The tender was published on January 5 2007 and closed on February 9.

The complete offers (in order of financial guarantees) were:

1. HOTEL LOTTE CO.LTD offered an additional rental of either: (a) (i) 40% of the total monthly gross sales for liquor (excluding wines/champagnes); (ii) 20% of the total monthly gross sales for wines/champagnes; and (iii) 25% of the total monthly gross sales for cigarettes/tobacco; OR (b) a minimum monthly guarantee of SGD10,486,000 ($6,821,882); whichever is the higher of (a) or (b).
In tangible terms, the offer from Lotte based on the minimum monthly guarantee over three years equates to: S377,496,000 ($245,721,289). (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

2. DFS VENTURE SINGAPORE (PTE) Ltd offered an additional rental of either: (a)(i) 40% of the total monthly gross sales for liquor (excluding wines/champagnes); (ii) 20% of the total monthly gross sales for wines/champagnes; and (iii) 25% of the total monthly gross sales for cigarettes/tobacco; OR (b) a minimum monthly guarantee of: (i) S$10,166,667 ($6,612,853 ) for Year 1; (ii) S$10,333,333 ($6,722,344.75) for Year 2; and (iii) S$10,500,000 ($6,830,990) for Year 3. ; whichever is the higher of (a) or (b). PLUS Bonus incentive for increased sales: (i) An additional rental of SGD500,000 if annual sales exceeds SGD320,000,000 for Year 1; (ii) An additional rental of SGD750,000 if annual sales exceeds SGD355,000,000 for Year 2; and (iii) An additional rental of SGD1,000,000 if annual sales exceeds SGD385,000,000 for Year 3.
In tangible terms, the offer from DFS based on the minimum monthly guarantees equates to: S$.371,999.990 ($242,104,119) (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

3. SKY CONNECTION LTD offered an additional rental of either: (a) (i) 40% of the total monthly gross sales for liquor (excluding wines/champagnes); (ii) 20% of the total monthly gross sales for wines/champagnes; and (iii) 25% of the total monthly gross sales for cigarettes/tobacco; OR (b) a minimum monthly guarantee of SGD9,301,000; whichever is the higher of (a) or (b).
In tangible terms, the offer from Sky Connection based on the minimum monthly guarantees equates to: S$.334,836,000 ($217,919,852). (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

4. NUANCE-WATSON (SINGAPORE) offered an additional rental of either: [A] (i) 40% of the total monthly gross sales (TMGS) for liquor (excluding wines/champagnes); (ii) 20% of the TMGS for wines/champagnes; and (iii) 25% of the TMGS for cigarettes/tobacco; OR [B] a minimum monthly guarantee (MMG) of: (i) S$8 million(M) for Yr 1; (ii) S$8.5M for Yr 2 and Yr 3; whichever is the higher of [A] or [B].
PLUS An annual incentive rent of: if sum of the MMG for the year (as defined in [B]) exceeds sum of the percentage rents for the year (as defined in [A]) the following incentive rent is payable: 45% of the total annual gross sales (TAGS) exceeding S$312M in Yr 1; 45% of the TAGS exceeding S$366M in Yr 2; 45% of the TAGS exceeding S$391M in Yr 3; If sum of the percentage rents for the year (as defined in [A]) exceeds the sum of the MMG for the year (as defined in [B]) the following incentive rent is payable: 30% of the TAGS exceeding S$312M in Yr 1; 30% of the TAGS exceeding S$366M in Yr 2; 30% of the TAGS exceeding S$391M in Yr 3.
In tangible terms, the offer from Nuance-Watson based on the minimum monthly guarantees equates to: S$.300,000,000 ($195,268,484). (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

5. AELIA SAS offered an additional rental of either: (a) (i) 40% of the total monthly gross sales for liquor(excluding wines/champagnes); (ii) 20% of the total monthly gross sales for wines/champagnes;and (iii) 25% of the total monthly gross sales for cigarettes/tobacco; OR (b) a minimum monthly guarantee of SGD8,100,000; whichever is the higher of (a) or (b).
In tangible terms, the offer from Aelia SAS based on the minimum monthly guarantees equates to: S$.291,600,000($189,795,243) (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

6. ALDEASA offered an additional rental of either: (a) (i) 40% of the total monthly gross sales for liquor (excluding wines/champagnes); (ii) 20% of the total monthly gross sales for wines/champagnes; and (iii) 25% of the total monthly gross sales for cigarettes/tobacco; OR (b) a minimum monthly guarantee of S$5,186,361; whichever is the higher of (a) or (b).
In tangible terms, the offer from Aldeasa based on the minimum monthly guarantees equates to: S$.186,708.990($121,542,824) (1 SGD = 0.650818 USD/1 USD = 1.53653 SGD).

OTHER CONCESSIONS AT CHANGI: Many other concessions at Singapore Changi Airport have also been tendered by the CAAS which are due to close in the next couple of weeks, or in March. These include the following:

Tender for Wine concession at Departure/Transit Lounge South, T3. Tender: CAA000ETTO7000008. Tender Ref: CAA000/CM/2007/T03.
Closing date: 23.02.2007. (This closing date has been extended).

Tender for Cigar concession at Departure/Transit Lounge Sout, T3.
Tender: CAA000ETTO7000009. Tender Ref: CAA000/CM/2007/T04.
Closing date 16.02.2007.

Tender for Luxury Brand Name concession(s) – 6 shop units. At Departure/Transit Lounge South Level 2. T3. Tender: CAA000ETTO7000021. Tender Ref: CAA000/CM/2007/T05.
Closing date: 21.02.2007.

Tender for Luxury Brand Name concession(s) – 2 shop units. At Departure/Transit Lounge
South,T3. Tender: CAA000ETTO7000023. Tender Ref: CAA000/CM/2007/T12.
Closing date: 21.02.2007.

Tender for Optical shop concession at Departure/Transit Lounge South T3. Tender:
CAA000ETTO7000020. Tender Ref: CAA000/CM/2007/T10.
Closing date: 16.02.07.

Tender for Children's concept concession and/or toys/games at Departure/Transit Lounge North, T3. Tender: CAA000ETTO7000025. Tender Ref: CAA/000/CM/2007/T14.
Closing date: 02.03.2007.
Tender for Pharmacy concession at Departure/Transit Lounge South and Basement 2 North T3. Tender: CAA000ETTO7000026.
Closing date: 22.02.2007.

Tender for Watch concessions at Departure/Transit Lounge T3. Tender: CAA000ETTO7000028. Tender Ref: CAA000/CM/2007/T08.
Closing date: 01.03.2007.

Tender for Chocolates/Candy/Delicatessen cncession at Departure/Transit Lounge North and/or Departure/Transit Lounge South, T3. Tender: HDB000ETTO7000029. Tender Ref: CAA000/CM/2007/T22.
Closing date: 12.03.2007.