The author is an analyst at Shinhan Investment Corp. She can be contacted at [email protected] — Ed.
Travel agencies: Strong recovery seen in package travel bookings
Both Hana Tour Service and Modetour Network saw more than 1,000% year-on-year growth in outbound travelers in May. Package travel customers, their main source of revenue, soared more than 4,000% year-on-year, hitting a new high since the outbreak of COVID-19. Package travel bookings for the next three months have soared by more than 30,000% year-on-year, with monthly average growth close to 5,000% year-on-year.
In absolute terms, however, the total number of package travel customers stands at just 10,000 to 30,000 people, well below the monthly average in 2019. We expect tourism revenues to improve at a faster pace. slower than expected, with costs (airfares, landing fees) remaining high and airline capacity still at half of pre-pandemic levels.
Foreign-only casinos: visible improvement seen in monthly data
Foreign-only casinos reported a significant improvement in monthly revenue in May. Grand Korea Leisure and Paradise recorded a combined table decline of KRW 293.1 billion (+19% YoY) and sales of KRW 35.3 billion (+49% YoY), approaching the upper end of the monthly income range seen over the past 27 months following the COVID-19 outbreak.
We also note the continued improvement in key indicators (increase in attendance → increase in drop-offs → recovery in the waiting percentage → growth in sales). At Grand Korea Leisure, VIP and mass visitors have visibly increased from previous stagnant levels, leading to an increase in table drop and a more stable hold percentage, and resulting in sales growth.
The improvement of all the key indicators is mainly explained by: 1) the resumption of marketing campaigns in foreign markets; and 2) the removal of national restrictions on opening hours. Paradise and Grand Korea Leisure have been sending overseas marketers since late April and early May, as part of efforts to attract existing customers and new visitors ahead of the resumption of flight operations and the complete removal of distancing rules. social. We believe these efforts are now beginning to result in a gradual improvement in monthly data. From 2H22, we expect a faster recovery in the influx of Japanese visitors, the main clientele of foreign-only casinos.
Paradise and Grand Korea Leisure have operated 24 hours a day even during the pandemic, but have really started to see an increase in visitors spending longer hours at their casinos after restrictions on facility opening hours were fully lifted. multipurpose in April. Casinos are now starting to see visitors staying until dawn.
Foreign-only casinos will show faster revenue improvement
We maintain our OVERWEIGHT view on the leisure sector and favor casino operators over travel agencies due to expectations of a faster earnings recovery. Despite expectations of a quick recovery and the resumption of dividend payments, casino stocks have yet to see their market capitalizations return to 2019 levels. We believe overseas marketing campaigns will help improve more revenue from foreign-only casinos in the future. Kangwon Land, which is open to locals, is likely to see an upward trend in daily sales since the restriction on side bets and the visitor cap were lifted on May 16.
Despite the surge in package travel bookings, travel agencies are expected to see macroeconomic risks weigh on the earnings recovery. However, we believe expectations of a rebound are already priced in, with the combined market capitalization of travel agencies surpassing 2019 levels. pandemic.