Lotte Tour Development Co. has posted its highest-ever quarterly operating profit, powered by a surge in Chinese tourists to South Korea’s top tourism destination, Jeju Island, and placing big bets at its flagship casino.
Lotte, which operates Jeju Dream Tower Casino and Grand Hyatt Jeju on the island, said on Tuesday that its second-quarter operating profit reached 33.1 billion won ($24 million), a quarterly record-high, on sales of 155.7 billion won, up 35.8% from a year earlier.
It posted 5.9 billion won in net profit – its first gains since 2020.
Lotte’s hotel business also performed well. Sales at Grand Hyatt Jeju stood at 41 billion won in the second quarter, its second-highest quarterly sales revenue.
The performance was driven by a dramatic rebound in high-spending Chinese visitors, whose presence helped casino revenue jump 65.4% year-on-year to 110 billion won, an all-time high for the company.
Jeju’s visa-free entry policy for Chinese travelers played a critical role.
Between April and June, about 1.4 million Chinese nationals entered South Korea, up nearly 18% from a year earlier, according to the Ministry of Justice.
A third of all foreign visitors to Jeju during the first five months of the year were Chinese, according to local government data.
“The Dream Tower Casino, which we completed in 2020, has finally shaken off its initial construction burden and is now in full profit-making mode,” said a Lotte Tour official. “Unlike other operators that pay hefty rents and accommodation fees, we own our entire hotel, casino, shopping and dining complex, which significantly lowers fixed costs and boosts profitability.”
SECTOR-WIDE REBOUND UNDERWAY
The resurgence in Jeju, a long-time favorite destination for Chinese package tourists, is lifting the broader South Korean casino sector, which was hit hard by the COVID-19 pandemic and Beijing’s clampdown on cross-border gambling.
Analysts expect Korea’s other casino operators to benefit from the same macro tailwinds.
Paradise Co., which runs foreigner-only casinos in Incheon, is forecast to have posted a 15.8% on-year jump in second-quarter operating profit to 37.1 billion won, according to financial data provider FnGuide Co.
Grand Korea Leisure Co. (GKL), another major operator targeting foreign gamblers, is estimated to have earned 13.8 billion won in second-quarter operating profit, up 4.1% from a year earlier.
The local recovery coincides with a global casino rebound, led by Macau.
Gross gaming revenue (GGR) in the Chinese special administrative region, a bellwether for the sector, hit 22.1 billion patacas ($2.73 billion) in July – the highest since the pandemic began and about 90% of its pre-pandemic level in July 2019.
POLICY MOVE TO BOOST KOREAN TOURISM
Industry watchers said a policy decision in South Korea could turbocharge the country’s casino earnings in the coming months.
Analysts said Korea’s casino operators are expected to continue their winning streak in the second half, supported by the anticipated nationwide expansion of the country’s visa-free entry program for Chinese group tourists in the third quarter.
“High-volume VIP players prefer environments where they can blend in, particularly amid tighter Chinese surveillance on capital outflows,” said an executive at a major casino operator. “When more general tourists are around, VIPs feel less conspicuous, which can ironically make them more comfortable spending big.”
The planned visa exemption could accelerate Korea’s broader tourism rebound and cement the return of its casino industry as one of the pandemic’s unlikely comeback stories, analysts said.
By Tae-Ung Bae
btu104@hankyung.com
In-Soo Nam edited this article.
