Lotte hotel projects ‘ suspended’ in China
Group experiences tougher situation after THAAD dispute
Some of Lotte Group’s hotel plans have been suspended in China, a senior executive of Lotte China told the Global Times on Tuesday.
The executive, who wished to remain anonymous, also stressed that China has always been Lotte’s “most important” overseas market and that the company has “never wavered” on this point.
According to the executive, Lotte China, based in Shanghai, has four hotel projects in China. Construction on two of them, one in Shenyang, capital of Northeast China’s Liaoning Province, and one in Chengdu, capital of Southwest China’s Sichuan Province, has been suspended.
Lotte is the sole investor in both projects. Lotte China didn’t provide a reason for the suspensions.
According to a report by the South Korea- based Aju Business Daily on Monday, the Shenyang hotel, which was to have 530 rooms, had an opening date of November 2019.
Lotte is also discussing with third parties proposals for two other hotel projects, both in East China’s Shandong Province,
the executive said, adding that concrete launch dates had not been decided.
Lotte plans to open new hotels and resorts in a number of overseas markets including Russia and Japan in the second half of this year, according to overseas media reports. The company plans to open 1,000 hotels globally by the end of 2050.
“Lotte has not yet decided on its development plans in China. But I think that Lotte’s development in China should hinge on the market, and we will make plans based on market changes in China,” the executive told the Global Times on Tuesday.
The executive admitted that Lotte’s business has experienced hard times in China since the second quarter of 2017, especially in the retail sector.
Lotte’s business in China has been battered after the company pushed ahead with a land swap deal in February to let US troops install the THAAD missile defense system in South Korea, according to
media reports. The executive said that 87 Lotte Mart supermarkets’ operations in China had been “temporarily suspended.” At one time, Lotte Mart had 112 supermarkets in China.
Data from a report by South Koreabased Yonhap News Agency on Thursday showed that Lotte Mart’s global sales fell by 7.9 percent year- on- year in the second quarter and 94.9 percent in China during the period.
“But we still want to improve the Lotte Mart business in China by communicating with consumers and other parties including dealers,” the executive said.
Besides the retail sector, other business segments under Lotte have also encountered problems. For example, Lotte’s dutyfree chain, which was long highly reliant on spending by Chinese tourists, saw its sales decline about 30 percent year- onyear in the second quarter of this year, according to another Aju Business Daily report on Thursday.
Lotte Group consists of a number of business units including hotels, food and beverage operations, retail outlets, chemicals and finance.
Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times on Tuesday that Lotte’s situation in China was not entirely a political issue.
It also showed that traditional retail is under fierce competition from new business models like ecommerce.
Chen said that the worst time for bilateral trade between China and South Korea has passed.
Bilateral trade surged 10.2 percent year-on-year to $152.3 billion in the first seven months this year, Chinese customs data showed on Tuesday.
“China and South Korea have always maintained sound trade relations. If China and South Korea can solve the THAAD issue satisfactorily, the two countries can maintain stable trade relations,” noted Chen.