Hopeful signs for full comeback of Korean resort operator Paradise

Paradise Co., a major South Korean resort and casino operator, is taking big steps towards a full comeback this year from the pandemic shock, with a focus on Japanese tourists early in the year and then Chinese visitors who are expected to return to Korea following Beijing’s releasing of its strict zero-COVID policy.

According to Paradise, its casino table game drop, casino visitors’ money exchanged into chips, amounted to 42.7 billion won ($32.3 million) in March 2023, 85.6% of the 49.9 billion won recorded in March 2019.

The company attributed the rebound to a recovery in foreign visitors to Korea and its casino operations since the economic reopening last year.

Given the fact that group tours of Chinese tourists, generally considered big spenders, have yet not resumed, the latest figure is an encouraging sign for the revival of Paradise’s business that relies significantly on its casino, which is allowed only to foreign visitors under a Korean law.

The main driver for the pickup in Paradise’s casino revenue was Japanese tourists filling the vacuum left by Chinese visitors and accounting for the lion’s share of Paradise's revenue in March.

Seeing a light at the end of the tunnel for the gradual recovery in the number of foreign tourists to Korea, Paradise plans various promotional events to woo more Japanese visitors.

HEAVY TOLL FROM COVID-19

While no business escaped the COVID-19 fallout, the travel and leisure sector was one of the most heavily hit as the pandemic left most borders closed until recently.

The number of foreign tourists to Korea also plummeted from 17.5 million in 2019 to 2.5 million in 2020 and 970,000 in 2021, according to Korea’s Ministry of Culture, Sports and Tourism on Tuesday.  

Over the same period, Paradise logged consecutive operating losses -- 86.2 billion won in 2020 and 55.2 billion won in 2021, while its debts piled up to 1.96 trillion won in 2021 from 1.87 trillion won in 2019.

Paradise had no choice but to let 20% of its employees go in June 2020 and then ask the rest to take a furlough amid the unprecedented pandemic-driven crisis.

But foreign visitors to Korea in 2022 picked up by a whopping 230% on-year to 3.2 million thanks to eased COVID-19 restrictions, and Paradise finally swung to a profit of 10.4 billion won for tye year.

The casino and resort operator also reinstated its furloughed employees and brought in new hires in the second half.  

RETURN OF JAPANESE BODES WELL FOR FULL COMEBACK 

Japanese tourists have driven the recovery of Paradise since late last year. They made up the biggest portion, or 19.7%, of total foreign tourists to Korea in February and accounted for 60% of Paradise’s entire revenue in March.

To attract more Japanese tourists, Paradise last month changed the face of the company to Korean actor Park Seo-joon, the star of Korean TV drama series "Itaewon Class," which has become popular among Japanese viewers.

It will also actively promote its partnership in operating Paradise City in Incheon with SEGA SAMMY Holdings Inc., a Japanese entertainment conglomerate with businesses ranging from arcade games, toys and animation to casino slot game machines in resort businesses, to boost its appeal to Japanese visitors.

EYEING ANOTHER LEAP WITH CHINESE TOURISTS

Once Chinese visitors’ group tours reopen as soon as May, the recovery of Paradise’s earnings for this year is expected to accelerate further.

Hana Securities Co. estimated in its latest report the operating profit of Paradise for 2023 and 2024 at 15.7 billion won and 21.3 billion won, respectively, up 51.0% and 104.8% from 2022.

Kosdaq-listed Paradise shares on Tuesday ended at 16,350 won, 35.7% higher from a 52-week low of 12,050 won recorded on July 12, 2022.

The stock ended down 0.7% at 16,240 won on Wednesday. 

Write to Mi-Kyoung Lee at capital@hankyung.com

Sookyung Seo edited this article.