South Korean casinos to benefit as China eases travel restrictions
Analysts expect foreigner-only casinos to see a significant uptick in sales.
South Korea.- NH Investment & Securities has said it expects South Korean casinos to benefit from an increase in Chinese tourism following the easing of the country’s zero-Covid policy and the lifting of travel restrictions. It expects top-line figures to return to pre-Covid-19 levels.
With the lifting of mandatory Covid-19 tests, a significant increase in Chinese mass visitors to casinos is expected, but the recovery for Chinese VIPs is expected to be gradual due to strengthened junket regulations.
Analyst Hazell Lee told the Business Korea news outlet: “We expect a release of pent-up demand, led by mass customers from China following the anticipated [South] Korea-China flight expansion in March. As for Chinese VIPs, a recovery should unfold throughout the rest of 2023, but the pace is to be gradual.”
Before the Covid-19 pandemic, South Korea was a popular destination for Chinese tourists. South Korea required Covid-19 testing for tourists from mainland China, Hong Kong and Macau for a period after China eased its response to Covid-19 in early January but that requirement was lifted on March 11.
Casino operators in South Korea saw a surge in business in the first two months of 2023. Revenue at Grand Korea Leisure rose by 437.2 per cent year-on-year in February while Paradise Co posted casino revenue of KRW44.67bn (US$34.0m), up 162.7 per cent when compared to last year.
The analyst also noted that sales at Kangwon Land, South Korea’s only casino resort open to locals, had fallen below pre-pandemic levels after the initial signs of strong pent-up demand after the lifting of social distancing rules in April 2022. This is believed to be due to smoother overseas travel and shifting demand for leisure activities among Koreans, according to Lee.
In full-year 2022, Kangwon Land returned to profit with a net income of KRW115.6bn and recommended a final dividend of KRW350 per share.