Ahead of the visa-free entry for group tourists from China, hotel stocks have risen. However, there was a significant gap in stock revenue rates among hotel stocks. Companies focused on hotel operations in Seoul fared differently from those that were not.
According to the Korea Exchange on the 21st, GS PNEL and West T&D saw their stock prices rise by 24% and 14%, respectively, over the last month (from June 19 to July 18). Both corporations share the common aspect of owning and operating three to four-star hotels in Seoul.
GS PNEL was established in December last year following a spin-off from GS Retail's institutional sector. Among the hotels owned through Parnas Hotel, Nine Tree operates six four-star hotels in Seoul, accounting for about two-thirds of Parnas Hotel's room count.
West T&D operates Seoul Dragon City in Yongsan-gu, Seoul. Within Seoul Dragon City, there are four hotels: Novotel, Novotel Suites, Grand Mercure, and Ibis Styles. Among these, the share of three to four-star hotels exceeds 80% based on room count.
The reason three to four-star hotels in Seoul are highlighted as strengths is that the government plans to temporarily allow visa-free entry for Chinese group tourists.
Nam Seong-hyun, a researcher at IBK Securities, said that "three to four-star hotels have a significant connection to the demand from foreign visitors, particularly from China," adding that "the ability to accommodate group tourists after visa-free entry is allowed has become crucial."
In contrast, Hotel Shilla's stock price has risen only 4% over the past month, which is relatively low. This figure falls below the KOSPI index's increase of 7% during the same period. Ananti's stock price dropped by about 10%.
Hotel Shilla operates, in addition to the five-star Shilla Hotel in Seoul, Shilla Stay and is expected to benefit from the increase in foreign group tourists. The issue lies in the estimation that the losses in Hotel Shilla's travel retail (TR) institutional sector have continued into the second quarter of this year (April to June). Given that 80% of Hotel Shilla's revenue comes from the travel retail and distribution business, expectations are understandably low.
Ananti also operates "Ananti at Gangnam," but it has a relatively small share in the overall hotel and resort segment. The proportion of Ananti at Gangnam based on room count is in the 8% range.
A researcher from a securities firm noted that "Seoul has the lowest supply of hotels relative to demand across the country," adding that "as such, once foreign tourists enter through Incheon International Airport, there can be a rapid profit, leading to a clear concentration on companies with a significant number of three to four-star hotels in Seoul."