The resumption of Chinese group tours to South Korea and subsequent return of mass market players is expected to benefit Korea’s foreigner-only casinos throughout the rest of 2023, according to NH Investment & Securities analyst Hazell Lee.
In a note published in local media outlet Business Korea, Lee said she anticipates a “rapid recovery in indicators” for the country’s casinos, led by mass visitors. This she added, follows the resumption of Chinese group tours to Korea in August 2022 and the exemption of e-Visa issuance fees for Chinese group tourists until the end of 2023.
“The time for a rapid recovery in indicators looks to be here, centering upon Chinese mass visitors,” Lee wrote. “As negative sentiment related to VIP games in China remains in play, the pace of recovery in Chinese VIP-related indicators may be somewhat slow, but it is worth noting that the direction of recovery is clearly being confirmed.”
According to Lee, the correlation coefficient between Chinese inbound tourists and casino visitors has now reached 0.6 while “the return of a long-absent (since 2017) customer segment bodes well for the casino industry.”
However, the correlation coefficient between Chinese inbound and Chinese VIP drop amount is currently at only 0.2, suggesting it is mass visitors rather than VIPs returning by way of group tours.
“In 2017, during which Chinese inbound traffic plummeted 48% year-on-early on a suspension of group tours to Korea (as part of the Chinese government restrictions on Korean cultural products), the Chinese VIP drop amount fell only 17% year-on-year,” Lee said.
“This difference is attributable to the fact that Chinese VIPs generally are individual tourists. In other words, the resumption of group tours to Korea cannot guarantee a rapid recovery in Chinese VIP drop amounts. That said, an overall recovery direction is clear cut.”
Lee has named Paradise Co, operator of Incheon integrated resort Paradise City and casinos in Seoul, Busan and Jeju, as her top pick for the sector with its “casino business and its non-casino domains [to] benefit significantly from the resumption of Chinese group tours.”