[Click eStock] Lotte Tour Development, 'Hotel Boom' Continues with Final Approval for Jeju Casino

[Asia Economy Reporter Ji Yeon-jin] Yuanta Securities forecasted on the 12th that Lotte Tour Development will experience strong performance momentum through casino sales following the hotel boom caused by COVID-19, as the Jeju Provincial Government recently granted final approval for the Jeju Dream Tower casino operation.

LT Entertainment, a 100% subsidiary of Lotte Tour Development, will expand and relocate the casino operation from Jeju Lotte Hotel to Jeju Dream Tower next month and reopen it, following the approval from the Jeju Provincial Government. Previously, Lotte Tour Development opened the Jeju Dream Tower complex resort in December last year. With 1,600 rooms, it is the largest in Jeju, currently operating only Tower 1 (750 rooms), and Tower 2 (850 rooms) will open next month.

The Jeju 5-star hotel market is expected to enjoy an unprecedented boom this year as some existing overseas travel demand shifts due to the COVID-19 situation. Next month, the Jeju Dream Tower Tower 1 room occupancy rate (OCC) is estimated to reach 90%. Researcher Park Seong-ho of Yuanta Securities stated, "Even if Jeju Dream Tower generates no casino revenue during the COVID-19 phase, it is estimated that the resort can achieve a break-even point (BEP) at a quarterly hotel revenue level of around 75 billion KRW," adding, "If the OCC indicator remains favorable after Tower 2 opens, it is advisable to approach Lotte Tour Development from a positive investment perspective."

Additionally, the casino opening next month is expected to achieve a minimum net sales of 200 billion KRW after the end of COVID-19. The Jeju Dream Tower casino will operate with 153 tables and 261 ETG and machines, which is comparable to Paradise City. Applying Paradise City's 2019 revenue per gaming device to the number of gaming devices at Jeju Dream Tower, the casino revenue at Jeju Dream Tower is anticipated to reach the 350 billion KRW range.

Researcher Park said, "After the anti-corruption campaign by the Chinese Xi Jinping government, some junket operations in Macau have actively expanded their business areas to Southeast Asian integrated resort-type casinos since the mid-2010s," adding, "Jeju is less than three hours flight time from major Chinese cities and operates a visa-free entry system for Chinese visitors, offering junket operating conditions comparable to Southeast Asia," and "By recruiting a large number of casino professionals from Macau, casino revenue growth centered on Macau junkets is expected after the end of COVID-19."