Casino Stocks in South Korea Increase Thanks to Foreign Tourism

Although South Korea’s eased visa policy for Chinese tourists isn’t set to take effect until later in the third quarter, casino stocks are already climbing in anticipation of a surge in inbound travel.

South Korea’s Casino Sector Rises Ahead of Visa Changes for Chinese Tourists

South Korea’s gaming industry is already seeing gains ahead of planned visa exemptions for Chinese tourists. Although the policy isn’t set to take effect until later in Q3, shares in the casino and hospitality sectors are already hitting record highs in anticipation of a tourism boom.

China rolled out a similar initiative last November, offering visa-free entry until December 31 for South Korean citizens, along with travelers from Norway, Finland, Denmark, and five other nations. These reciprocal visa waivers are being viewed as a positive sign of improving diplomatic ties between the two countries.

Lotte Tour Development’s shares have surged over 50% since January. In the same timeframe, Paradise gained 28%, while Grand Korea Leisure rose by 7%. As of Saturday, Lotte Tour (operator of foreigner-only casinos such as Jeju Dream Tower) had climbed 37.4% in the past month alone. Reflecting confidence in this momentum, the National Pension Service boosted its stake in Lotte Tour from 5.01% to 7.05%.

Kim Hye-young, a researcher at DAOL Investment & Securities, observed that relations between South Korea and China have improved since China introduced visa-free entry for Koreans last November. They noted that a steady rise in tourist numbers could benefit foreign casino operators involved in an integrated resort.

South Korea’s Gambling Scene Relies on Foreign Tourists

Out of South Korea’s 19 casinos, only one, Kangwon Land in Gangwon Province, is accessible to local players, with the remaining venues dependent entirely on international visitors. The industry faced potential disruption last December when then-President Yoon Suk Yeol briefly declared martial law.

Travel demand is projected to rise during the peak summer season. Japan is nearing Obon, one of its major holidays in August, while China is gearing up for the Mid-Autumn Festival and National Day “Golden Week” in October. In anticipation, major carriers like Korean Air have launched new routes to destinations such as Macau, Bangkok, Taiwan, and China, and have also ramped up flights on high-demand routes.

It should be noted, however, that while this might bring more tourists to the country, this also hides the potential for unlicensed gambling to flourish. Recently, the South Korean tourism sector called for more stringent measures to combat illegal gambling.

Despite that, hotel owners in South Korea are poised to benefit from the projected increase in tourism in the country. It’s expected that inbound tourism will return to pre-COVID levels this year, driving a stronger performance in the second half of the year.