A real-estate finance approach on pricing duty-free leasing: understanding conflicts at Korea's Incheon International Airport

A real-estate finance approach on pricing duty-free leasing: understanding conflicts at Korea's Incheon International Airport

This letter proposes a real-options pricing model and determinants influencing retail rents from real-estate finance in an attempt to shed light on pricing airport duty-free leasing. A real-options approach suggests that the current leasing price conflicts at Incheon International Airport are incurr...

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Bibliographic Details
Published in:Current issues in tourism Vol. 23; no. 12; pp. 1454 - 1459
Main Authors: Song, Woon-Kyung, Lee, Hyun Cheol
Format: Journal Article
Language:English
Published: Abingdon Routledge 17-06-2020
Taylor & Francis Ltd
Subjects:
Air travel
airport concessions
Airport lights
Airports
Determinants
duty-free leasing price
Finance
Incheon International Airport
Leasing
Pricing
real options
Securities prices
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Summary:This letter proposes a real-options pricing model and determinants influencing retail rents from real-estate finance in an attempt to shed light on pricing airport duty-free leasing. A real-options approach suggests that the current leasing price conflicts at Incheon International Airport are incurred by the increased withdrawal option value after negative sales shocks. Determinants of retail leasing rents explain high duty-free rents at Incheon: great location to draw large passenger traffic, diluted anchor tenant power, and favorable-to-the-airport contract type.
ISSN:1368-3500
1747-7603
DOI:10.1080/13683500.2019.1638891