Surging tourist arrivals lift outlook for Korean hotels, casinos
2026.07.15 14:10
According to the Ministry of Culture, Sports and Tourism, the country’s cumulative inbound tourist arrivals reached a record 8.72 million in the first five months of this year. The total had surpassed 10 million as of June 20.
Data also showed that foreign visitors spent approximately 2.12 trillion won ($1.42 billion) on card purchases in Korea in May alone.
Amid the trend, NH Investment & Securities Co. maintained its “buy” rating on the hotel and casino sectors on Tuesday, saying that favorable conditions are emerging to support growth across the leisure, hotel and casino industries.
Despite the supportive macroeconomic backdrop, however, the brokerage lowered its target prices for major companies across the board, citing the recent underperformance of small-cap stocks in the equity market.
“A favorable exchange rate and longer stays by long-haul visitors are driving higher spending per traveler, creating conditions for spillover effects across the leisure industry,” noted Lee Hwa-jung, an analyst at NH Investment & Securities. “Rather than focusing on short-term indicators, investors should pay attention to the structural shift toward rising inbound tourism and higher visitor spending.”
According to the Korea Tourism Data Lab, the country’s overall tourism balance posted a surplus of $220.5 million in May, marking the third consecutive month of surplus.
Unlike previous tourism surpluses that were driven by a decline in outbound travel by Koreans during economic downturns, the latest surplus reflects healthy growth fueled by both a steady increase in foreign visitor arrivals and higher spending per tourist.
The improvement in tourism indicators is directly supporting growth in the hotel industry.
Rising inbound demand has boosted room occupancy while lifting the average daily room rate (ADR), resulting in simultaneous growth in both demand and pricing.
NH Investment & Securities said foreign spending on hotels rose 35 percent in May, significantly outpacing the 19 percent increase in inbound tourist arrivals.
The brokerage attributed the stronger growth to surging room demand that pushed up ADR.
The casino industry is also entering what could be a meaningful recovery phase.
Shares of Korean casino operators have underperformed this year as concerns over slowing growth in Macau’s casino market weighed on the sector.
The Macau casino market has been pressured by slowing growth in gross gaming revenue and concerns that higher brand royalty fees charged by some global casino operators could erode profitability.
However, Korean casinos operate entirely under their own brands, eliminating the risk of higher brand royalty fees.
In addition, growth in the mass-market segment is still in its early stages, supported by this year’s increase in inbound tourism, leading analysts to conclude that current market concerns are excessive.
“Korean casinos operate under their own brands, so the brand royalty fee risk seen in Macau does not exist here,” Lee said. “Growth in the mass-market segment is only beginning to accelerate.”
“In this regard, the current weakness is merely a temporary phenomenon typical of the early growth stage, while the industry’s structural fundamentals remain on an upward trajectory,“ the analyst added.
Among individual companies, NH Investment & Securities named GS P&L Co. as its top sector pick and set a target price of 66,000 won.
The brokerage expects the company to post second-quarter consolidated revenue of 160.5 billion won and operating profit of 25.5 billion won, in line with market expectations.
It said occupancy rates and room rates at the company’s flagship properties such as Grand InterContinental and Westin, located in Seoul’s major tourism districts and Gangnam commercial area, continue to improve, while operating leverage is expected to accelerate sharply as the peak season for inbound tourism approaches.
The brokerage lowered its target price for Seobu T&D Co. to 15,000 won to reflect the possibility of vacancies following the termination of its lease agreement with Homeplus Co. at the end of August.
Nevertheless, it said the strong hotel market is supporting higher room rates at Seoul Dragon City, a large hotel complex operated by the company in central Seoul, while construction permits for its Najin Shopping Center redevelopment project have been secured, paving the way for construction to begin in October and providing ample upside potential for the stock.
Paradise Group received a target price of 20,000 won, with the brokerage expecting continued growth in drop volume from mass-market customers and strong growth in Japanese visitor arrivals.
Although second-quarter revenue is projected to rise to 326.1 billion won, operating profit is expected to fall short of forecasts at 44.9 billion won due to a sharp decline in the casino hold rate in June.
Lotte Tour Development Co. was assigned a target price of 22,000 won as additional direct flights to Jeju and a surge in visitor arrivals support steady growth at the casino and hotel operations within the Jeju Dream Tower integrated resort.
While market concerns remain over the company’s outstanding convertible bonds, the brokerage said operating efficiency continues to improve as the company focuses on high-value customers.
Grand Korea Leisure Co. (GKL) was given a target price of 16,000 won, supported by synergies from the relocation of its Seoul Dragon City casino as well as continued recovery in foreign exchange income and table-game revenue at its major properties, including the COEX branch in Seoul and the Lotte branch in Busan.
The brokerage added that as a state-owned casino operator, GKL also offers an attractive dividend profile backed by stable cash flows, making it appealing to income-focused investors.
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