Lotte CEO says hard work on Guam begins now

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Written by Doug Newhouse
Monday, 22 April 2013 12:49

Lotte Duty Free told The Business this month that the operator's JTB joint venture will be key to its success in the Guam duty free market.

In addition to his earlier statement acknowledging the commencement of formal negotations with Guam International Airport Authority (GIAA), Lotte Duty Free CEO Won-Joon Lee told The Business that the company's downtown Aurora Resort & Spa Hotel will be a key factor when it is up and running this December.

As reported, the centrally located Tumon Bay facility will double up as a hotel and retail downtown shop after Lotte Hotels & Resorts agreed a 30-year lease with its owners to transform, rebrand and reopen it by the end of this year as Guam’s ‘most luxurious hotel’.

Lee said: "Japanese and Korean tourists are currently the key nationalities which fuel Guam’s tourism industry. Indeed, our intimate knowledge of these travellers and the insight we have into their spending habits was one of the reasons we were able to put together such a strong and tailored proposition to the Guam International Airport Authority.

“Visa waivers have played an important role in opening Guam up as a tourist destination for Russian visitors, while a similar scheme for Chinese visitors – were it to be ratified – would obviously change the landscape significantly.

“It has been well documented how important Chinese travellers have been to the boom in duty free spending across Asia and an influx to Guam following a visa waiver could have a huge effect on all aspects of Guam’s economy, not least our own business.”

While the 30-year lease Lotte now has with the Aurora downtown operation is obviously a significant investment, the location in Tumon Bay is also as central as it could be. So how important does Lee think this will be as part of the package Lotte is able to offer its customers in future – particularly considering the pressure on hotel rooms in Guam?

Lee (pictured right) said: “The Lotte brand is incredibly strong in Korea and Japan, so we expect visitors from
these countries who know and trust us to stay at our hotel," he said. “We have strong links with various tourist boards in these countries – particularly through Lotte JTB, a joint venture between ourselves and JTB – formerly the Japan Tourist Bureau and one of Japan’s biggest tour operators.

“Our ability to market our hotel and retail offerings on Guam through these partnerships as part of tourism packages will be invaluable.”

Lee said Lotte is 'delighted' with this opportunity which he 'genuinely believes' is a milestone victory for the retailer, even though the airport's published annual sales turnover peaked at just under $35m in 2011. By contrast, Lotte Duty Free generated a total sales turnover from its South Korean nationwide chain of airport and downtown shops of $2.84bn in 2012 - a remarkable increase of 21.4% over 2011, corresponding to an additional $500m sales increase in 2012 alone.

Nevertheless, Lee adds that 'the hard work begins' in Guam now and as he says: "We have proven we can win a highly competitive international tender process and we must now show we can deliver."


Lee confirmed that Lotte will give DFS airport operation employees the opportunity to become Lotte employees 'should they wish to continue in their current roles', as he explained: "With the rapid growth we have predicted at the airport we will undoubtedly need to supplement the existing workforce with new recruits, so there will be plenty of employment opportunities for the local community.

“Over 65% of Lotte Duty Free employees have been with the company for over 10 years. This high retention rate demonstrates we create a rewarding place for our staff to work and develop.”

Looking further afield and while Changi Airport and Bali are obviously targets for Lotte’s further expansion, would the retailer ever consider working in a joint venture with any other retailer in future at other locations we asked?

Lee said: “We assess every opportunity on a case-by-case basis, and this is not an approach we have ruled out for the future.”

Asked what his three business wishes for Lotte Duty Free overseas over the next 12-month period would be, he concluded: “2013 will see us make a concerted effort in the bidding for concessions at three airports – Guam, Bali and Singapore Changi – as well as pursuing other opportunities.

"Having been selected as the preferred bidder at Guam, my first wish would be that we deliver successfully on the ambitious vision we have laid out for the airport facility and our broader role as major employers and contributors to the local community.

“My second and third wishes would be for similar results in Bali and Singapore. Further expansion internationally would demonstrate that Guam is not merely a one-off success, but a key milestone in our journey to becoming a major global force in the duty free business. Our desire is to become a top two global duty free retailer by 2015.”

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