Extra 4Q flights to Jeju from Hong Kong and elsewhere could boost Jeju Dream Tower earnings: analyst

Additional flights during the fourth quarter, to the South Korean holiday island Jeju from Hong Kong and possibly places on the Chinese mainland, could support further growth in casino drop at the Jeju Dream Tower resort’s foreigner-only casino (pictured in a file photo). That is according to brokerage Meritz Securities Co Ltd. Hong Kong Express Airways Ltd, a low-cost regional carrier, will from Sunday (October 25) operate two flights daily between Hong Kong International Airport and Jeju International Airport, versus the current one flight daily. That is according to GGRAsia’s review of publicly-available schedules. In a Monday memo, Meritz analyst Kim Min-young said that for Lotte Tour Development Co Ltd’s Jeju Dream Tower casino, higher customer drop – the amount paid by customers for chips at gaming tables – and a recovery in hold rate could significantly boost gaming revenue and operating profit. She noted that the casino’s third-quarter drop had risen 3.2 percent year-on-year to nearly KRW876 billion (US$661.7 million), with casino visitors up 8.9 percent, to just over 188,000. However, net gaming revenue for the three months to September 30 had fallen 8.6 percent, to just under KRW127.34 billion. September’s table-game hold rate dropped to 10.8 percent, the analyst noted. In August, the table hold rate had been 15.0 percent, and in July, it was 22.6 percent, show operator data. Lotte Tour had reported September table-game sales of KRW25.78 billion, down 49.6 percent year-on-year. The brokerage expects third-quarter consolidated operating profit to have fallen 31.9 percent year-on-year, to circa KRW36.1 billion, below market expectations. The institution said continued growth in the number of VIP customers, and in the tally of repeat visits, supported the operator’s rolling-chip table strategy, despite lower hold rates. Ms Kim said casino membership had risen to circa 166,000 by September, from circa 94,000 at year-end 2024. Ms Kim said the outlook for growth in the resort’s number of VIP customers, and for repeat visits by clients, remained encouraging despite earnings volatility from lower hold rates. She added that expanded air connectivity, a growing customer base, and potential refinancing could support Jeju Dream Tower’s medium-term earnings. Uncertainty over the future percentage rate of casino annual revenue payable to the country’s Tourism Promotion and Development Fund, could ease once the scope and financial burden of the proposed changes became clearer.