Duty Free Philippines expects higher sales to tourists

CEBU CITY, Philippines — Duty Free Philippines projects 10% growth in sales this year due to the continuing increase in foreign tourist arrivals and the expansion of its operations in Cebu. Duty Free Philippines on Tuesday opened its second-largest outlet at SM City Cebu, bringing to 11 its duty-free shops nationwide. General Manager Michael Christian Kho said they had opened another outlet here to take advantage of the untapped Cebu market. He cited the opening of a five-star hotel adjacent to the mall, as well as the continuing increase in foreign tourist arrivals in Cebu. From January to May this year, foreigners visiting Cebu increased by 8% to 284,059 from a year earlier, Tourism Undersecretary Phineas A. Alburo said. Nationwide, foreign tourist arrivals went up 7% to 1.37 million. The government is targeting 3.4 million foreign tourists this year. In 2007, foreign tourist arrivals in Cebu increased by a quarter to 598,644. Nationwide, foreign tourists went up by 8% to 3.1 million. Mr. Alburo said more tourists, especially from China, are expected to visit Cebu because two Chinese airlines have started regular chartered flights between Shanghai and Cebu. China Eastern Airlines flies twice a week, while Shanghai Airlines offers a chartered flight once a week. Mr. Kho said the opening of a new duty-free shop in Cebu should increase the city’s revenue contribution by 15%. Last year, Cebu shops contributed only 5% or $9 million to Duty Free Philippines’ gross revenues of $170 million, he said. He said Cebu contributed 15% to total revenues in the late 1980s and early 1990s. "We want to tap the increasing tourist arrivals here and the opening of a five-star hotel," Mr. Kho said, adding that dollar remittances from Filipinos working abroad continue to grow. He added that they plan to carry more products, particularly prestige brands that attract foreign tourists, at the new outlet. — Marites S. Villamor, BusinessWorld