Lotte Cultureworks Forgetting Coexistence Values... No Change in Rent
Lotte Cinema, the Only One Among the Three Multiplex Companies to Maintain Existing Rent Fees
[Asia Economy Reporter Jonggil Lee] CGV and Megabox are offering rent reductions to tenants struggling due to the spread of the novel coronavirus infection (COVID-19). The purpose is to minimize the difficulties faced by tenant businesses and to overcome the COVID-19 crisis together. Lotte Cinema, which has the highest proportion of directly managed stores (76%), is not joining this effort. It still demands payment of the existing rent. There is criticism that it has forgotten the value of coexistence.
A Lotte Cultureworks official said on the 13th, "We are internally considering rent reductions, but nothing has been decided yet." Although it has been eight days since Megabox announced rent reductions on the 4th, no signs of change have been detected. A theater official said, "This contrasts with CGV, which offered better terms two days after Megabox's announcement," adding, "It should be seen as a lack of willingness to negotiate."
CGV offers rent reductions of up to 35%, which is 5% higher than Megabox, for leased stores or subleased (re-leased) stores located in buildings it owns. It is evaluated that CGV has significantly eased tenants' burdens by providing customized support tailored to tenant situations, such as temporary closures, early termination, and extension of contract periods.
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The situation of stores located in Lotte Cinema is different. In a situation where business is slow, they are expected to pay a full month's sales as rent. As the COVID-19 spread enters a prolonged phase, there is a risk of a surge in business closure reports. In fact, from the 1st to the 12th of this month, only 890,221 people visited movie theaters. This is about one-seventh of the 6,664,160 visitors during the same period last year. Even if they want to solicit customers, there are no passersby to respond.
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