HKIA loss signals big focus shift for Sky Connection

Sky Connection’s plans to upgrade its shopping facilities at Lo Wu and Lok Ma Chau have been accelerated by the recent loss of the company’s duty free liquor and tobacco concession at Hong Kong International Airport.

 

But CEO Baker Salleh says the company needs to do ‘a better job’ at the railway station outlets anyway, irrespective of the recent HKIA results, which he admits quite freely were disappointing.

 

“The airport result is a bit of a disappointment. We first won the contract 13 years ago beating DFS and others for the new jewel at Chek Lap Kok; then we retendered successfully and won again. We were very happy.

 

Lowu Liquor offer

“The name of the game is to win the tender or you are out – that’s the truth. We played and we must abide by the rules. We went as far as we thought the contract was worth. If someone else is better with the crystal ball then good luck to them; but we are still disappointed.”

 

[Left: Liquor category at Sky Connection store in Lo Wo]

 

Although Sky expected liquor and tobacco sales at HKIA to show double digit growth in future when preparing its bid, Salleh said some more recent signs suggest that some parts of the Mainland market may actually be experiencing a softening in demand for luxury goods.

 

Baker Salleh CEO Sky Connection“Red Bordeaux wine prices have come down 20% in China during the past three months. That’s a barometer sign that China is facing adjustments,” Salleh remarked. “There is no doubt there has been a softening of Mainland Chinese demand for luxury goods. Before, people were willing to buy at any price, now they are more rational.

 

[Right: CEO Sky Connection Baker Salleh]

 

“The South China Morning Post reported recently that sales in China of watches, jewellery and high-end goods in May saw the slowest growth in the past 18 months. We forecast double-digit growth for the Hong Kong Airport liquor and tobacco five year plus three year extension concession period. We thought it was a reasonable assumption and bid according to that.”

 

For the full-length interview click here.

 

 


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