A state contract to sell duty-free goods statewide is up for grabs, with the airports division seeking bids on the right to operate the concession for five years at the airports and elsewhere.

Travel retailer DFS Hawaii, which has held the contract since the early 1960s, operates duty-free shops at the airports and in Waikiki under a state contract that expires May 2007. The company also sells goods at more than 30 traditional airport retail stores under a contract expiring May 2008, plus at an entertainment-themed retail complex connected to its flagship duty-free store in Waikiki.

Sharon Weiner, vice president of business development for DFS U.S. Group, declined to comment on issues related to the new contract. DFS was the sole bidder for the duty-free concession in 1996, 2001 and in 2003, when DFS Hawaii was allowed to rebid the last 32 months of a five-year contract. The contract has since been extended a year to May 2007.

The rebid of the duty-free contract in 2003 was part of a settlement between the state and DFS Group to resolve a dispute over $49 million in back rent for Hawai'i duty-free shops.

The decline in Japanese visitors this year has hurt DFS Hawaii, which announced in June it would temporarily cut work hours for the majority of its 1,200 employees. Japanese visitors account for 90 percent of DFS Hawaii's duty-free sales and more than 50 percent of its traditional retail business. Weiner has said the decrease in Japanese customers will not affect DFS Hawaii's contracts with the state.

A pre-bid conference is set for 9 a.m. today in Conference Room C at the Honolulu International Airport's Inter-Island Terminal Building, according to a notice published by the state. Bidders must submit a Bid Intent Package by Dec. 11, and bids will be accepted up to 10 a.m. Dec. 28, when sealed bids will be opened.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.