Hotel Lotte, Duty-Free Holds Up Amid 'Corona Shock'... Hotel and Amusement Park Lag Behind

Duty-Free Division Records 4.3 Billion Operating Profit in Q1
Sales Down 37.5% Year-on-Year
Hotel, World, and Resort Divisions Report Operating Losses

Sogong-dong Lotte Hotel. Photo by Lotte Group

[Asia Economy Reporter Cha Min-young] Hotel Lotte, which operates various businesses including duty-free, hotels, and resorts, turned to a loss in the first quarter of this year due to the impact of the novel coronavirus infection (COVID-19). However, the duty-free business division surprisingly posted a profit, successfully defending profitability.

Hotel Lotte announced on the 15th that its consolidated operating loss for the first quarter of this year was 79.1 billion KRW, turning to a loss compared to the same period last year (84.7 billion KRW). During the same period, sales amounted to 1.0874 trillion KRW, down 34.6% from last year's 1.6621 trillion KRW. Net loss also turned to a loss at 156 billion KRW, compared to a net loss of 143.5 billion KRW last year.

Among the business divisions, the duty-free business division, which accounts for the largest sales proportion, posted an operating profit. The duty-free business division recorded sales of 872.7 billion KRW and operating profit of 4.3 billion KRW in the first quarter. Sales decreased by about 37.5% compared to 1.3965 trillion KRW in the same period last year.

The hotel business division posted sales of 154.4 billion KRW and an operating loss of 63.8 billion KRW. Sales decreased by 12.7% compared to last year's 176.9 billion KRW. The World business division, which operates amusement parks, recorded sales of 45.9 billion KRW and an operating loss of 16.7 billion KRW. The resort business division also posted sales of 14.4 billion KRW and an operating loss of 2.9 billion KRW.

A Lotte Duty Free official explained, "While the domestic duty-free industry has recorded significant losses recently due to COVID-19, Lotte Duty Free was the only one to post a profit. However, this disclosure excludes the Busan corporation, which includes the Gimhae Airport branch with a large proportion of rent, so the overall decline is expected to be even greater." They added concerns that the situation may worsen in the second quarter as the COVID-19 crisis prolongs globally.

A Lotte Hotel Seoul official said, "New hotel depreciation expenses were recognized, and entry restrictions and a decrease in foreign tourists due to COVID-19 coincided. Additionally, since the first quarter is traditionally the off-season for the industry, we expect performance to recover as domestic tourism demand increases after the easing of COVID-19 in the second half of this year."

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