Since the start of the year, an increase in inbound foreign tourists, including from China, has raised expectations for better earnings in the casino industry. In January–February, the net sales and drop amount (the money casino customers exchanged for chips to play) at the three major foreigner-only casinos in Korea—Paradise, Lotte Tour Development, and Grand Korea Leisure Co. (GKL)—also jumped sharply from a year earlier.
According to the casino industry on the 8th, the combined net sales of Paradise, Lotte Tour Development, and GKL for January–February this year came to about 334.1 billion won, up about 27% from the same period a year earlier. During the same period, the drop amount also rose more than 10% to about 2.1944 trillion won.
Generally, an increase in the drop amount is interpreted as an expansion in casino usage. Casino revenue is determined by the drop amount and the hold rate (the percentage of money the casino recovers by winning games).
Paradise's casino net sales for January–February this year were 181.2 billion won, up 26.1% from the same period a year earlier (143.7 billion won). During the same period, the drop amount rose 5.7% year over year to 1.1682 trillion won.
Lotte Tour Development, which operates the Jeju Dream Tower integrated resort, also saw sales surge. The company's casino net sales for January–February jumped 50.4% from 52 billion won last year to 78.2 billion won this year. Over the same period, the drop amount increased 43.3% from 303.1 billion won to 434.5 billion won.
GKL, which operates the foreigner-only "Seven Luck" casinos in Seoul and Busan, also saw net sales rise 11.8% from 66.8 billion won to 74.7 billion won. The drop amount increased 12.1% from 527.9 billion won to 591.7 billion won.
The casino industry cites the increase in inbound foreign tourists as the biggest driver of better results. According to the Korea Tourism Organization (KTO), the number of foreign tourists who visited Korea in January this year was 1,265,658, up about 13.3% from a year earlier. That is 114.6% of the level in January 2019, before COVID-19.
In particular, tourists from China and Japan are leading the recovery in demand for travel to Korea. In January this year, Chinese nationals were the largest group among foreign visitors at 418,703, followed by Japan at 225,351. The numbers of Chinese and Japanese tourists recovered to 106.6% and 109.1% of January 2019 levels, respectively.
In Jeju, the effect of increasing Chinese tourists is even more pronounced. Inflows have grown thanks to the visa-free policy for group tourists and the expansion of direct flights from major cities.
The number of visitors to Lotte Tour Development's Jeju Dream Tower casino in January–February this year totaled 96,966, up 40.6% from a year earlier. During the same period, Paradise's Jeju Grand Casino net sales were tallied at 5 billion won, up 30.1% from a year earlier.
An industry official said, "In the past, operations centered on VIP customers, but recently 'mass' customers—general tourists—are increasing rapidly," adding, "The rise in tourists visiting Korea is also affecting the expansion of casino usage."
Casino operators are also moving to expand infrastructure to meet growing mass-customer demand. Paradise recently acquired the Grand Hyatt Incheon hotel near the Paradise City integrated resort on Yeongjong Island, Incheon, securing additional rooms.
Casinos account for 70%–80% of Paradise City's total sales and are its core business. Paradise plans to divert mass customers to the Hyatt hotel and expand VIP comp (comped; complimentary) rooms at the Paradise City main building to strengthen both VIP acquisition and mass capacity at the same time.
Park Jeong-hyeon, an analyst at Kiwoom Securities, said, "A favorable operating environment continues on the back of the recent weak won trend and the benefit from Japan travel restrictions," adding, "Steep earnings growth is set to resume from the second quarter as travel demand revives."