Lotte Tourism Development: A Rising Star in Korean Leisure – Named Top Stock as Revenue Hits Record Highs
SEOUL, SOUTH KOREA – October 26, 2023 – In a significant boost for the Korean leisure industry, Lotte Tourism Development has been designated the top stock pick by Meritz Securities, fueled by exceptional performance in both its casino and hotel businesses. This breaking news signals a potential turning point for the sector, as the company experiences a surge in revenue and profitability. Investors are taking notice, and the implications for tourism in Jeju Island are substantial.
Casino Revenue Skyrockets, Driven by VIP Growth
Meritz Securities’ recent coverage highlights a remarkable 48.3% year-over-year increase in Lotte Tourism Development’s sales for the third quarter, reaching KRW 206.3 billion. Even more impressive is the 112.7% jump in operating profit, hitting KRW 47.2 billion. A key driver of this success is the casino business, which recorded its highest-ever net sales in September – traditionally a slower month. According to Meritz Securities researcher Kim Min-young, the increase is attributable to both a 26.9% rise in the VIP drop amount (total betting volume) and a robust hold rate of 16.9%, indicating the casino is effectively retaining a significant portion of wagers.
This isn’t just about more players; it’s about higher-spending players. The simultaneous growth in VIP traffic and per-person betting scale suggests a renewed confidence in the Korean casino market, particularly within the integrated resort model.
Jeju Dream Tower: A Virtuous Cycle of Growth
The success of Lotte Tourism Development is inextricably linked to the infrastructure of the Jeju Dream Tower complex, which houses the 1,600-room Grand Hyatt Jeju hotel. Kim Min-young points to a “virtuous cycle” where the casino’s performance directly benefits the hotel, and vice versa. With a hotel occupancy rate nearing 90%, the complex is demonstrating the power of integrated resorts – destinations that offer a comprehensive entertainment experience.
Evergreen Insight: Integrated resorts represent a global trend in the gaming and hospitality industries. By combining casinos with hotels, restaurants, shopping, and entertainment venues, these complexes aim to attract a broader range of visitors and create a more sustainable business model. The success of Jeju Dream Tower underscores the viability of this approach in the Asian market.
Inbound Tourism Rebound Fuels Optimism
Looking ahead, Meritz Securities anticipates continued growth in the fourth quarter, driven by an “acceleration of inbound (foreign tourists) inflow.” This prediction aligns with broader trends in the Korean tourism sector, which is experiencing a strong recovery following the easing of pandemic-related travel restrictions. The early repayment of overseas convertible bonds by Lotte Tourism Development further strengthens the company’s financial position and allows for greater investment in future growth.
Kim Min-young believes the domestic casino industry has “entered a new phase of growth,” citing increasing foreign visitor numbers, supportive government policies, and ongoing infrastructure development. She forecasts a recovery in Chinese VIP and mass market customers in the short term, and the expansion of “stay-type consumption” centered around integrated resorts and hotels in the medium term.
Meritz Securities has also initiated coverage of other foreign-visitor-focused casino operators, including Paradise and GKL, signaling a broader positive outlook for the industry.
The Korean casino industry, once heavily reliant on Chinese high rollers, is diversifying its customer base and strengthening its appeal to international tourists. This strategic shift, coupled with significant investments in infrastructure and a favorable regulatory environment, positions the sector for sustained growth in the years to come. For investors seeking opportunities in the leisure and hospitality space, Lotte Tourism Development is clearly a name to watch.
Stay tuned to archyde.com for the latest updates on the Korean casino industry and emerging investment opportunities. We’ll continue to provide in-depth analysis and breaking news coverage to keep you informed.
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