Korea’s Incheon Airport Considers $3 Billion Resort to Lure China Tourists

Incheon International Airport Corp., operator of South Korea’s busiest gateway, is close to approving plans for a $3 billion resort to help lure more Chinese tourists.

A U.S. company has proposed building the development, which will include a hotel and convention center, Lee Chae Wook, chief executive officer of the state-owned airport company, said yesterday in an interview in Incheon. A deal will probably be signed by the end of June, with construction starting next year, he said, without naming the investor.

“We want to build a landmark near the airport that will resemble Singapore’s Marina Bay Sands,” Lee said. “The investment will help attract more visitors from China and create more jobs.”

Incheon Airport, 50 kilometers (31 miles) west of Seoul, also plans medical centers, malls and entertainment facilities as Asian nations compete for holidaymakers from China, the world’s fastest-growing air-travel market. The Marina Bay Sands, built by casino-operator Las Vegas Sands Corp., opened in 2010. Singapore is aiming to triple tourism revenue by 2015.

“There is a need to develop new attractions to lure more tourists from China,” said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. “They come in large numbers and they tend to spend a lot of money.”

Incheon Airport may increase passenger numbers 5.7 percent this year to 37 million, helped by rising arrivals from China, Lee said. The facility is also adding luxury-goods outlets to lure more Chinese and Japanese travelers, who accounted for 45 percent of duty-free sales last year, Lee said.

That demand and the opening of LVMH Moet Hennessy Louis Vuitton SA (MC)’s first airport outlet worldwide allowed Incheon to surpass Dubai and London Heathrow to become the world’s biggest airport in terms of duty-free sales last year, Lee said. The company generates about 65 percent of sales from shops, hotels and other businesses not directly related to flying, he said.

“By growing non-aeronautical revenues, we can afford to offer lower landing fees, which attracts more airlines and passengers,” Lee said. The airport charges about $3,500 to $4,000 to handle a landing by a Boeing Co. 747 aircraft, he said.

Incheon is also considering a bid for Edinburgh Airport with Korean financial institutions as it works to boost sales from overseas, Lee said. He declined to elaborate. BAA Ltd., Britain’s biggest airport operator, is selling the Scottish facility following a competition review.

The Korean airport operator may also have to use loans to pay for a new second terminal because of delays in a planned initial public offering, Lee said. The facility, due to open before South Korea hosts the 2018 Winter Olympics, will boost the airport’s capacity to 62 million travelers a year, he said.

South Korean President Lee Myung Bak’s government has said it wants to sell 15 percent of Incheon Airport in an IPO. That plan has been delayed by opposition from lawmakers and is now unlikely to happen before parliamentary elections scheduled for April, Lee said.

To contact the reporters on this story: Kyunghee Park in Singapore at [email protected]; Seonjin Cha in Seoul at [email protected]

To contact the editor responsible for this story: Neil Denslow at [email protected]