South Korea’s Hotel Lotte is on the expansion trail, after enjoying a year of record earnings from its hotel and resort division in 2023, boosted by the return of inbound visitors to the country.
The group, which includes travel retail alongside a hotel division, has seen sales fall at its travel and duty free shops. As a result, hotels and resorts now account for over one quarter of group sales, against just 12.2% in 2019. And last year, hotel operations brought in operating profits of KRW468.8bn, from record revenues for 2023 of KRW1.3trn.
Growing visitor numbers
South Korea welcomed around 11 million visitors in 2023, and will be expecting that figure to climb in 2024, back towards a pre-pandemic record of more than 17 million in 2019. One key source market for South Korea is China. While tourist numbers have moved up and down due to diplomatic tensions between the two countries over the years, the current calmer relationship should see growing Chinese visitor numbers once more.
The company is now looking both to acquire hotels, and expand using the asset light model, both in its home market of South Korea, and internationally. It can deploy a brand family including the upper upscale Signiel, luxury brand Lotte, boutique brand L7, business hotel flag Lotte City Hotels, and Lotte Resorts. Currently the group has 22 hotels across South Korea, with international presence in four US destinations, four Russian hotels, and properties in Japan, Myanmar and Uzbekistan as well as Vietnam.
Searching for landlord partners
At celebrations to mark the company’s 51st anniversary, chief executive officer of Lotte Hotels & Resorts Kim Tae-hong said the group will now focus on signing management agreements, in preference to purchasing hotels or leasing them. Discussions are under way to take on management of two hotels in South Jeolla Province under this new arrangement. There are also plans to add L7 branded hotels in South Korea’s capital, Seoul. An L7 hotel in the country’s second city, Busan will open later this year. L7 Haeundae will have 383 rooms, and feature a rooftop swimming pool.
Abroad, one area of focus is Vietnam, building on a positive performance from the L7 West Lake Hanoi, which opened in 2023. Other cities are now on the target list, report local media, taking L7 to Ho Chi Minh and Da Nang. In the US, the company has reopened a hotel in Chicago, after acquiring the Kimpton Hotel Monaco Chicago in 2022, paying USD36m. The property has been rebranded to Lotte’s L7 boutique brand instead.
