The plan is simple: assimilate the tourism experience of two companies belonging to the same branch of the family tree of the Lotte conglomerate and create a landmark in Korea’s favourite holiday resort.
Imposing, erected to heights never before allowed in Jeju, dominating the sight of those who arrive on the island and have to pass through the heart of the city. Approaching from any point. A landmark with a casino. The reference point.
“Let it be the culmination of all these years leading the tourism experience”, explains Lawrence Teo, Chief Operations Officer and Vice President of Lotte Tour Development. In travel services with any kind of product – from honeymoon packages to golf tours plus uncountable cruises – but also through Dongwha, the first duty-free company to be established in the country in 1973, and even today, with more competition, a strategic partner in attracting tourists, mainly Chinese.
Very seldom do coincidences appear in business. The Chinese are the ones who feed the ambitions of the gaming operators in the country the most. As in all other Asian gaming jurisdictions.
Dream Tower will be like this, guarantee its investors: an icon of the island that last year attracted 15.5 million visitors. Almost as if it were the natural culmination of the decades of experience we have in the field of business we master, says Lawrence Teo, someone to whom gaming is no stranger. He was involved in several projects of Melco Crown Entertainment, now Melco Resorts, in Macau, in the early days of another Lawrence’s gaming empire.
Experience and location, repeats Teo.
Both in Jeju and Seoul, as he focuses his vision through the glazed office panes of the group in the main artery of the South Korean capital.
“Location has been one of our strengths,” he explains to Macau Business. He could not be more right. The towering office building belonging to the group that has dominated the tourism tours industry for almost 40 years to and from South Korea could not have been more central. A local San Ma Lou albeit a little more lush and with more history, since it is a stone’s throw from Gyeongbokgung Palace, the main royal palace built in 1395 by the Joseon Dynasty.
There is always something dynastic about South Korea; the logic of which does not escape the business conglomerates of a country of 51 million people with a GDP of US$1.4 trillion, GDP per capita of US$27,500 (MOP220,000), and life expectancy of 82 years, according to 2016 figures.
And all they needed to do was to pick up the numbers and do the maths. And in the desire to diversify the business, zero in on the natural vocation of the group. No brainer? Not exactly, but almost, as the group’s top executives have been explaining to many – from government officials to their Chinese co-developers, to investors and now the international media.
A jurisdiction where only one casino is open to domestic players, at a remote sky resort in Gangwon Province, Jeju has been obtaining casino licences for foreigners in places such as Seoul and Busan. Small casinos. Like Macau, before the liberalization. Today, there’s a game changer. It’s the time of the Integrated Resort (IR). And they are coming on stream big time.
After Paradise City glued to Incheon Airport in the capital, the first phase of Jeju Shinhwa World, an IR with a family theme park with four hotels and villas, occupying 2.5 million sq. m. of land, half an hour’s drive from downtown opening later this year.
It’s South Korea upping its game, while around the region jurisdictions put more aces on the table. Korean investors such as Lotte Tour are confident it is time to throw their hat in the ring. Their trump card? Their own culture.
Dominating the city’s landscape like the Eiffel Tower in Paris, Dream Tower will stand 169 metres tall, support 38 floors, with 11 restaurants and bars, shopping mall with 60 retail stores, two pools, two spas and an observation deck. And, of course, a casino with 190 tables, most catering to baccarat, not to mention 420 slot machines.
The casino floor is small if compared to Macau IR’s but way bigger than the gaming experience in the country until recently.
Last month, Lotte Tour issued convertible bonds worth KRW40 billion (US$35 million) to acquire a foreigners-only casino licence, as announced by Business Daily. Days later, the Macau newspaper identified Grand Hyatt as the luxury brand to operate both towers of the IR and its 1,600 all-suite rooms. While the first tower with 750 rooms and all the hotel facilities and casino will be under Lotte Tour Development C. Ltd., the second tower and its 850 rooms will be commercialized as a hotel residence by the group’s Chinese partners, real estate developer Greenland, and the world’s largest construction company, CSCEC, ranked 27th in last year’s Fortune Global 500.
And Jeju is…?
Seoul-Jeju is perceived as the “world’s busiest flight route”, feeding domestic traffic that takes holidays and extended weekends to make the flight to the beaches, visit Mount Hallasan, the dozens of museums – possibly the most per capita on the planet – Cheonjeong waterfall or UNESCO World Heritage sites such as Sunrise Peak and Manjanggull Cave.
“So many things to do here that will force people to return over and over”, explains Lawrence Teo during the flight to the island, when Macau Business went to visit the Dream Tower site and its almost completed foundations.
The casino will target the 3.6 million annual visitors, most of them Chinese. ‘Repeated visits are not taboo because of Jeju’s reputation as a clean, eco-friendly resort island’, explains the company’s visual presentation to investors Macau Business accessed. ‘No ‘Sin-City’ image comparable to Macau’…
And more important to Lotte Tour’s aspirations to having a Return On Investment (ROI) “soon”, the fact that Jeju offers 30-day visa-free entry, including for Chinese, and is the closest international destination from East China. Less then half of the flight time between Macau and Beijing or Shanghai.
“To cope with the annual increase of tourists, the local government is now planning a second airport, since the existing one can only deal with 24 million passengers a year”, says Teo.
While the company’s Chairman, Ki-byung Kim, announces “3,000 jobs including dealers . . . [and] . . . billions of Korean won” to the local Tourism Provincial Fund, his senior executives continue to plot the business that they all predict will reach as high as their casino tower.
Tourists in Jeju in 2016
3.6 million foreigners (mainly Chinese)
28% annual increase in foreign tourists since 2009