China Tourism Group Duty Free Accelerates Regional Expansion With Takeover of DFS Hong Kong and Macau Retail Network

China Tourism Group Duty Free is advancing its regional growth strategy through a definitive agreement to acquire the Hong Kong and Macau travel retail operations of DFS, a move that reshapes the balance of power in Greater China’s duty free sector. The transaction signals a shift toward stronger mainland-led participation in traditionally international retail markets and reflects broader changes in how travel retail is structured, managed, and positioned for future growth.

The agreement covers the transfer of DFS’ duty free stores in Hong Kong and Macau, together with selected intangible assets tied to DFS’ established brand concepts for exclusive use across Greater China. These assets include intellectual property that underpins retail formats and customer-facing experiences familiar to global travelers, allowing continuity of operations while enabling new ownership to implement localized strategies.

The acquisition will be completed through China Duty Free International Limited, a wholly owned subsidiary of China Tourism Group Duty Free, with the full consideration paid in cash. The transaction structure highlights the buyer’s financial strength and its intention to secure long-term operational control in strategically important travel retail locations within the Greater Bay Area.

Following completion, DFS will continue to operate its luxury travel retail business in markets outside Greater China. By retaining its presence across other international regions, DFS will remain active in global travel corridors while narrowing its focus to areas that align more closely with its long-term business priorities.

The transfer of ownership comes amid a period of transformation for Hong Kong and Macau as travel and retail destinations. Once defined by high volumes of international visitors and strong luxury consumption, both markets have experienced changes in visitor composition, spending behavior, and regulatory conditions. These shifts have prompted travel retailers to reassess store portfolios, operational models, and capital allocation strategies.

For China Tourism Group Duty Free, the acquisition represents a strategic entry point into two of Asia’s most recognizable duty free hubs. Hong Kong and Macau occupy central roles within the Greater Bay Area, serving as critical connectors between mainland China and international markets. By absorbing DFS’ existing retail footprint, the company gains immediate access to mature locations, established logistics systems, and long-standing relationships with global brand partners.

The transaction also supports the company’s ambition to evolve from a primarily domestic duty free operator into a more globally integrated travel retail platform. Expanding into internationally known retail environments enhances its ability to engage diverse consumer segments, including international travelers, regional visitors, and cross-border shoppers.

In parallel with the operational transfer, LVMH and the Miller Family will subscribe to newly issued H-shares of China Tourism Group Duty Free listed in Hong Kong, as part of a capital increase to be completed after closing. The investment will represent a limited share of the transaction proceeds and reinforces ongoing strategic alignment between the parties, despite the change in operational ownership.

A memorandum of understanding between China Tourism Group Duty Free and LVMH further strengthens the transaction framework. The cooperation arrangement establishes a foundation for future collaboration in areas such as product distribution, retail network planning, brand development, cultural initiatives, travel-related services, and customer engagement strategies across Greater China. The objective is to align complementary capabilities to support long-term value creation within the travel retail ecosystem.

The acquisition also reflects a wider trend toward consolidation and localization within the global duty free industry. As travel patterns become more regionally concentrated and regulatory environments grow more complex, scale and local market familiarity have become critical competitive advantages. Mainland-based operators with strong domestic networks and policy alignment are increasingly positioned to lead expansion in nearby international markets.

At the same time, the deal highlights the evolving role of travel retail as a platform for broader economic and cultural objectives. Beyond luxury consumption, duty free environments are being used to promote lifestyle products, cultural narratives, and emerging brands. Integrating established international retail concepts with localized offerings allows operators to respond more effectively to changing consumer expectations.

The transition marks the conclusion of a long operational chapter for DFS in Hong Kong and Macau. Over several decades, the retailer played a significant role in shaping large-scale duty free retail formats in both destinations, helping establish them as must-visit shopping stops for international travelers. Under new ownership, these assets are expected to continue operating while adapting to new strategic priorities.

For Hong Kong and Macau, the acquisition may influence the next stage of tourism and retail development. As both cities seek to refresh their appeal and diversify visitor experiences, travel retail remains a central pillar of economic activity. The involvement of a leading mainland duty free operator could result in new store concepts, revised merchandise strategies, and closer integration with regional tourism and transport initiatives.

Operational stability is expected during the transition period. Existing stores are anticipated to remain open, with staff, supply chains, and brand partnerships maintained to ensure continuity for customers and suppliers. Over time, changes may be introduced to align operations with the buyer’s digital infrastructure, data platforms, and regional management systems.

The transaction remains subject to customary regulatory approvals and closing conditions and is expected to be finalized within approximately two months. Once completed, attention is expected to shift toward integration planning, operational harmonization, and the rollout of longer-term growth initiatives across Hong Kong, Macau, and the wider Greater China region.

China Galaxy International is acting as the sole financial adviser to China Tourism Group Duty Free, while legal advisory services are being provided by King & Wood Mallesons for the buyer and Freshfields for DFS and LVMH.

As the global travel retail sector continues to adjust to new travel flows and consumer priorities, the acquisition underscores how leading operators are repositioning to secure future growth. The transfer of DFS’ Hong Kong and Macau operations to China Tourism Group Duty Free is set to play a defining role in the evolution of travel retail across Greater China in the years ahead.