Lotte may not be a household name in North American hospitality, but it could quickly become one thanks to hotel owners coming out of the pandemic looking for lower branding costs than what the likes of Marriott or Hilton demand.
The best North American brand recognition for South Korea-based Lotte Hotels & Resorts is likely the Lotte New York Palace, once owned by Harry and “Queen of Mean” Leona Helmsley and a prominent backdrop in TV shows like “Gossip Girl” and “30 Rock.”
But the hotel company has a new CEO for the Americas bullish on the prospects of building up Lotte brands across North America.
“Let’s be honest, it’s relatively unknown in the Americas. I think it’s safe to say that most Americans probably don’t even know how to pronounce the word ‘Lotte,’” Jim Petrus — who this month became CEO of the Americas division for Lotte (pronounced “low-tay”) — told Skift with a laugh. “One of our key objectives is to make sure that people are familiar with the brand and that they know what the brand stands for in different corners of the globe.”
Lotte’s footprint is largely focused across Asia with luxury and lifestyle brands like Signiel, L7 Hotels, and its eponymous chain. The company, which entered the North American market with the New York Palace acquisition in 2015, also has a hotel in Seattle it purchased last year. There is also a Lotte property in the U.S. territory of Guam.
The hotel company abandoned plans for what could have been a $4.5 billion initial public offering in 2016 following an embezzlement investigation at its parent company, Lotte Group.
Petrus previously worked with Blackstone and its BRE Hotels and Resorts hospitality portfolio as well as Starwood Hotels & Resorts and Hyatt. He also served as chief operating officer of the Trump Hotel Collection for the nine years prior to the ex-president announcing his candidacy in 2015, according to LinkedIn.
Petrus’s new role at Lotte fuels the company’s plan to become a true global brand. Lotte aims to add more than 20 hotels in the next five years, targeting large, gateway markets as well as tech-oriented and leisure markets in the Americas.
Lotte plans to focus North American growth around its namesake brand as well as L7 — its lifestyle brand that emphasizes sustainability, cultural experiences, and strong design.
“All of these are steps that will transpire [over time],” Petrus said of the growth target. “You don’t do this overnight.”
A Competitive (and Branded) Field
One might question the appeal for owners to go with a relatively unknown brand in the Americas like Lotte compared to the likes of Marriott or Hilton, but Petrus sees that as a competitive advantage.
“It’s a bit of a double-edged sword to a certain degree, but we don’t have some of the inherent infrastructure costs that the big boys pass on to owners,” Petrus said. “That’s the model that they follow, and they’ve been successful at that. Our angle will be a little bit different, and our costs will be less than the other guys on the block. Quite honestly, you need to do that because you need to give people a reason to consider you and to think about your brand as an option.”
This kind of lower cost value proposition has been the conversion negotiation strategy for more leisure and economical hotel companies like Wyndham and Choice Hotels.
The Curator Hotel & Resort Collection, a new independent group of higher-end hotels launched last year by a variety of owners and operators like Pebblebrook Hotel Trust, similarly sees lower cost structures as a compelling argument for operators to consider avoiding a bigger brand.
Owners have already reached out regarding potential conversion deals where they drop an existing brand agreement in favor of taking on one with Lotte, Petrus added. He expects to satisfy the company’s Americas growth ambition through a mix of these so-called conversions as well as ground-up construction.
“We’ve got a great deal of respect for those players that have bigger engines and have larger footprints,” Petrus said. “But on the flip side of it, we also know that there are a lot of owners, developers, and investors that are out there saying, ‘Gosh, is there a different way that we can do business? Is there a different model that we can follow [and] that might be a fresh start, given what’s happened in the world?’ Absolutely.”
Photo credit: Lotte Hotels & Resorts plans to add 20 properties, largely centered on the Americas, to its portfolio in the next five years (Pictured: the Lotte Hotel Seattle). Lotte Hotels & Resorts