The Peninsula to expand its luxury retail network with Hong Kong airport opening

The famed Hong Kong hotel brand will open a new retail shop this weekend, expanding its global retail network, in a bid to tap new tourist spending

PUBLISHED : Friday, 27 November, 2015, 1:55pm
UPDATED : Friday, 27 November, 2015, 6:13pm

While Hong Kong’s hotel sector faces a drop in mainland travellers this year, The Peninsula is pushing ahead with plans to open a retail shop at the city’s airport on Sunday.

Paul Tchen Pao-shan, the group general manager of operations of Hongkong and Shanghai Hotels, which operates The Peninsula, says he is upbeat about the venture, even as the luxury retail sector been under pressure in recent times, forcing a number international brands to close in Hong Kong.

“When customers do not come to us, we will go out to them,” Tchen said, adding that the 644 square foot shop will expand its product range to include customers who would not normally stay at the hotel.

“The airport is a good location for retail business. It is a place guaranteed to have a lot of traffic. There are many tourists who want to get rid of their local currency and they will shop at the airport for souvenirs,” he said. “Food items such as chocolate are popular among tourists.”

Tchen said the inspiration to diversify into luxury chocolates, teas and other gift items began during the height of the Japanese tourism boom in the late 1980s.

At the time, Japanese visitors accounted for the majority of room bookings. A culture of gift giving, however, meant that many guests needed to stockup before their return journeys, creating a demand for products that over time would become an integral part of the hotel’s business.

When the Japanese stock market imploded in the early 1990s, signalling an end to a long period of economic growth, visits by Japanese to Hong Kong began to decline, forcing The Peninsula to branch out with what had been an in-house business.

In 2001, the hotel signed a licensing agreement with Nuance-Watson under which Peninsula-branded food products were sold at a dedicated counter under the retailer’s duty free network at Hong Kong International Airport.

Business was so good that the Peninsula’s products were also sold under licence at a stand alone shop in 2003. The shop operated for 10 years until it was closed owing to rezoning of the airport retail area.

The retail outlet set to open on Sunday will be directly owned and operated by The Peninsula, according to Tchen.

“When we first started to sell products at the duty free shop in 2001, we did not have any retail experience. But now we have an experienced team of retail staff and we can operate our own shop at the Hong Kong airport,” he said.

During the past 14 years, the company has opened 27 retail outlets worldwide, including Taiwan and Singapore, where the company has no hotel presence.

“We consider running a retail shop in cities without a [Peninsula] hotel is like having an ambassador in that city,” Tchen said.

“When they travel to Hong Kong, some of these retail customers may consider staying with us. Also, when we open hotels in these cities in the future, the retail shops will have played an important role in building up the brand.”

The Peninsula also established retail shops in Japan in 2004, three years before it opened a hotel there.

The retail business contributed 2.8 per cent of Hongkong & Shanghai Hotels’ turnover last year.

Plans to take the retail concept online are underway with a launch tentatively set for March or April.

“The new generation of customers is growing up with shopping through their mobile phones or desktop computers. We have to offer what customers want,” Tchen said.