[Click eStock] "Lotte Tour Development Benefits from Increased Jeju-China Direct Flights"
KB Securities analyzed on the 21st that it expects a full-scale recovery of Chinese VIPs for Lotte Tour Development starting from the second half of this year.
Lotte Tour Development began operating direct flights between Shanghai and Jeju on March 26, and recently added flights connecting major Chinese cities such as Beijing, Ningbo, and Hangzhou, improving traffic. As of May, the number of Chinese flights operating at Jeju Airport has recovered to 38.7% compared to pre-COVID-19 levels, which is lower than Gimpo Airport's 85.5% and Incheon Airport's 58.5%, so it is expected to have relatively higher recovery elasticity.
Researcher Lee Seonhwa of KB Securities explained, "With traffic recovery in the second quarter of this year, casino net sales are expected to exceed 10 billion KRW per month, and hotel OCC has risen to the 60% range, significantly reducing operating losses."
Since the establishment of direct flights from China to Jeju Airport in March, Lotte Tour Development has maintained a drop amount of around 90 billion to 100 billion KRW per month. However, due to a low hold rate, the growth rate of casino sales is lagging behind the growth rate of the drop amount. Researcher Lee stated, "As traffic improves and the base increases in the future, the hold rate is naturally expected to return to the average hold rate (in the low double digits)."
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She added, "A similar situation is expected to continue in June, and casino net sales for the second quarter are forecasted at 33 billion KRW." For hotels, with an increase in available rooms and foreign guests, room sales are projected at 21.7 billion KRW, and with the increase in guests, F&B sales are also expected to rise, forecasting total hotel sales of 30.3 billion KRW for the second quarter. The travel sector is also estimated to record sales of 12.3 billion KRW as outbound Korean travelers increase.
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