Lotte Hotel going global

Lotte Hotel CEO Song Yong-dok speaks during a signboard hanging ceremony for the Lotte New York Palace in Manhattan, Wednesday. / Courtesy of Lotte Hotel

By Park Si-soo

Lotte Hotel, Korea’s largest hotel chain, plans to buy or build more than 30 hotels primarily in the United States and Europe in a bid to become the world’s third biggest hotel chain by 2018.

CEO Song Yong-dok unveiled the plan during a signboard hanging ceremony for Lotte New York Palace in Manhattan, previously named The New York Palace Hotel, a five-star luxury hotel that Lotte purchased in May for $805 million from U.S. real estate management firm Northwood Investors.

U.S. President Barack Obama will stay at the hotel during the 70th U.N. General Assembly later this month.

“We will acquire 33 hotels in Manhattan and other major cities around the globe,” Song told Korean reporters ahead of the ceremony, Wednesday. “We have 11 hotels in Korea and six overseas. Our goal is putting a combined 50 hotels under our control by 2020.”

The CEO said the company is in negotiations to buy 15 hotels and also considering acquiring another hotel in Manhattan.

Locations of hotels under buyout negotiations are Los Angeles, Chicago, London, Paris and Frankfurt, he said.

Han Yoo-ri, a Lotte Hotel spokeswoman, said the company is primarily considering building or buying hotels in these cities, but refused to elaborate. She said the company had set aside sufficient cash so the project will progress smoothly.

She denied allegations that the global expansion will be powered by money raised by Lotte Hotel’s initial public offering (IPO).

“The expansion plan was completed several years ago. This means it was finalized much earlier than when the IPO plan was made,” the spokeswoman said.

Lotte Group Chairman Shin Dong-bin recently promised to list the group’s hotel unit, the group’s de facto holding company, to improve the governing structure of the nation’s fifth largest conglomerate. Last week, Lotte Hotel selected KDB Daewoo Securities, Merrill Lynch International and Citigroup Global Markets Korea Securities as lead managers for its listing on the Seoul bourse.

Song said the firm’s expansion in New York will inspire the group’s other affiliates, especially beverage and confectionary units, to start operations there and in other U.S. cities.

“We purchased the hotel, believing this will benefit the group’s other affiliates,” the CEO said. “Major beneficiaries would be the group’s logistics and retail units.”

Meanwhile, Lotte Hotel has built its business foothold in Russia and other developing nations in Europe, China and Southeastern Asia.

In 2010, the company opened the Lotte Hotel Moscow and has built new accommodation in Vietnam, Uzbekistan and Guam while construction is ongoing in three Chinese cities and Yangon, Myanmar. The company also acquired a hotel in St. Petersburg earlier this year.