[Click eStock] "Lotte Gwangwang Gaebal, Reopening Boosts Domestic Travel Demand"

[Asia Economy Reporter Ji Yeon-jin] KB Securities stated on the 18th that Lotte Tour Development is expected to benefit from the phased recovery of daily life following COVID-19, maintaining a buy investment opinion and a target stock price of 23,000 won.

Lee Seon-hwa, a researcher at KB Securities, said, "Lotte Tour Development opened Tower 2 at the end of November last year and is operating 1,600 rooms. With reopening, an increase in occupancy rate (OCC) and a rise in average daily rate (ADR) due to increased domestic travel demand are expected," adding, "The increase in hotel guests also boosts food and beverage (F&B) and retail sales, which is a positive factor."

Lotte Tour Development, established in 1971 as a domestic and international travel agency, expanded its business area to foreigner casinos by acquiring Jeju Lotte Casino from Paradise in 2018. In December 2020, it opened the Jeju Dream Tower complex resort, expanding its business portfolio to include hotels and retail. As of last year, the sales composition by business division was 71.7% hotel, 19.7% casino, 3.3% retail, 3.1% travel, and 2.2% others.

The researcher emphasized, "With the Omicron variant becoming dominant, expectations for easing quarantine measures are increasing. The fastest contributor to performance recovery upon reopening is domestic travel demand. Jeju Island, as a major domestic tourist destination, is seeing a steady increase in domestic tourists visiting to lift travel restrictions."

Since the opening of Jeju Dream Tower, Lotte Tour Development operated only Tower 1 (750 rooms) but started operating Tower 2 (850 rooms) on November 29. Based on 1,600 rooms, the OCC recorded 43% in the fourth quarter of last year and currently reaches 70% on weekends. The ADR has surpassed 300,000 won during peak season.