Due to COVID-19 setbacks... Hotel Lotte's IPO indefinitely postponed

February Duty-Free Business Sales Expected to Plunge 40%

Corporate Value Also Declines

[Asia Economy Reporter Lim Hye-sun] Lotte Group's long-cherished project, Hotel Lotte's entry into the KOSPI market this year, has fallen through. The cause was the deterioration of performance due to the COVID-19 pandemic. On the 14th, according to Lotte Group and the securities industry, Lotte Group decided to indefinitely postpone the initial public offering (IPO) schedule of Hotel Lotte. This is because the corporate value of Hotel Lotte has declined due to the worsening profitability of the duty-free business division, which accounts for more than 80% of sales. As the COVID-19 situation continues, February duty-free sales are expected to plunge by more than 40% compared to the same period last year. A Lotte Duty Free official explained, "The impact of temporary closures, shortened business hours, and decreased visitors due to COVID-19 is significant," adding, "Although it is a 40% decrease compared to last year, considering that it had been growing more than 15% annually, the perceived drop is over 60%." This trend is expected to continue for the time being.

When Lotte Group pursued the listing of Hotel Lotte in 2016, the estimated public offering price was between 85,000 and 110,000 KRW. The market capitalization was expected to be around 15 trillion KRW. The atmosphere was not bad until early this year. Since last year, the number of Chinese tourists had been increasing again, and with Chinese President Xi Jinping’s visit to Korea in the first half of this year and signs of lifting the Chinese ban on group tours (Hanhanryeong), there was hope that Chinese group tourists would return. However, the situation became difficult after the COVID-19 outbreak. Hwang Kak-kyu, Vice Chairman of Lotte Group, said at a meeting hosted by President Moon Jae-in at the Korea Chamber of Commerce and Industry the day before, "In the case of Lotte Hotel, there were 28,000 room cancellations."

The completion of Lotte Group Chairman Shin Dong-bin’s 'one-top system' has also been delayed. Until the end of last year, Chairman Shin, who showed strong will for the listing of Hotel Lotte through personnel moves, is now reportedly emphasizing the need to focus on the group’s internal stability. Lotte Group planned to list Hotel Lotte to reduce the influence of Japan’s Lotte Group and bring it under Korea’s Lotte holding company system to establish a single governance structure under Chairman Shin. Hotel Lotte, in which Japan’s Lotte Holdings and its affiliates hold 99% of the shares, holds an 11.1% stake in Lotte Holdings Korea.

This content was produced with the assistance of AI translation services.