Korea's hotel and tourism industries posted strong earnings in the first quarter, traditionally considered the off-season for tourism. Hotels in central Seoul benefited from a rise in foreign guests visiting Korea, while in Jeju, demand from foreign casino patrons drove earnings in the integrated resort segment.
Parnas Hotel & Resort posted first-quarter revenue of 128.6 billion won and operating profit of 24.4 billion won, the tourism industry said Tuesday. Revenue rose about 39% and operating profit about 53% from a year earlier, marking a record first-quarter performance.
The results were driven by the rapid stabilization of Westin Seoul Parnas, which opened last September. The hotel posted first-quarter revenue of 31.7 billion won and operating profit of 200 million won, swinging to an operating profit in just its second quarter after opening. Its occupancy rate also rose to 73.0% in the first quarter from 71.9% in the fourth quarter of last year.
The company's existing flagship hotel and business hotel brands also contributed to the improved performance. Grand InterContinental Seoul Parnas posted first-quarter revenue of 46.7 billion won and operating profit of 9.2 billion won. Nine Tree by Parnas benefited from an increase in foreign individual travelers. The share of foreign guests at Nine Tree expanded to 69% in the first quarter of this year from 61% in the same period last year. The share of Chinese guests also rose to 15% from 9%.
Lotte Hotel & Resort also returned to the black, posting first-quarter revenue of 348.4 billion won and operating profit of 25.7 billion won. The recovery was led by an increase in foreign guests. The number of foreign guests in the first quarter rose 14.1% from a year earlier. Amid continued growth in inbound tourism, foreign demand was concentrated at Lotte's affiliated hotels clustered in Myeong-dong and Sogong-dong. Room revenue also rose 10.2%.
Overseas chains and newly opened hotels contributed to the top-line growth. Revenue from overseas chains operating in Vietnam and the United States, among other markets, rose 7.9% from a year earlier. L7 Chungjang, Brieve Gwangju, and L7 Gwangmyeong, which opened sequentially starting in the second half of last year, were also reflected in first-quarter results. The Lunar New Year holiday boost and a rise in average room rates partially offset the off-season impact.
Lotte Tour Development, which operates the Jeju Dream Tower integrated resort, posted record first-quarter earnings as both its casino and hotel businesses grew simultaneously. The company's consolidated first-quarter revenue rose 28.1% from a year earlier to 156.2 billion won. It was the first time first-quarter revenue exceeded 150 billion won. Operating profit jumped 121% from a year earlier to 28.8 billion won.
In particular, growth in revenue from the foreigner-only casino led the earnings improvement. Lotte Tour Development's casino segment revenue rose 40.3% from a year earlier to 118.63 billion won. Hotel segment revenue also rose 20.2% to 38.14 billion won. The growth in casino visitors led to additional spending on rooms and food and beverage within the integrated resort, widening the improvement in profitability.
However, despite the rise in operating profit, Lotte Tour Development continued to post a net loss. The first-quarter net loss was 7.5 billion won, sharply narrower than the 23.7 billion won loss a year earlier. While margins improved at the operating level, a return to net profit remains a challenge given non-operating burdens such as financial costs.
"The first-quarter results are meaningful in that foreign demand is not just raising occupancy rates but also lifting average room rates and ancillary revenue from food, beverage, and casino operations," a tourism industry expert said. "If this trend continues into the summer peak season, the earnings recovery in the hotel and tourism industries could become more pronounced."
