Depressed Travel Industry... 228 Package Tour Customers in April "Second Quarter Also Booking Deficits Instead of Trips"

[Asia Economy Reporter Oh Ju-yeon] As travel demand plummeted due to the novel coronavirus infection (COVID-19), leading domestic travel companies such as Hanatour and Modetour failed to avoid losses in the first quarter. The problem is that losses are expected to continue into the second quarter of this year, suggesting that the adjustment period could be quite prolonged.

According to Hana Financial Investment on the 7th, the number of package tour departures in April was only 228. This was due to a significant drop in travel demand caused by concerns over COVID-19. For example, Modetour's package tour departures in April were only 22, clearly reflecting the deteriorated business environment.

Accordingly, the travel industry is expected to continue its losing streak in the second quarter following the first quarter.

Hanatour's first-quarter operating revenue and operating profit were 110.8 billion KRW and -27.5 billion KRW, respectively, falling short of market consensus. This was due to a 54% decrease in the number of outbound travelers and a 75% drop in package tour departures.

The decline in package tour departures in the second quarter is expected to be even greater.

Hana Financial Investment forecasted that Hanatour's package tour departures in the second quarter would plummet by 99.9% year-on-year to below 1,000 people. The expected sales revenue is 11.1 billion KRW, down 94% from the same period last year, and the operating loss is expected to reach 30.4 billion KRW, indicating a high likelihood of continued losses following the first quarter.

The situation is similar for Modetour. Modetour recorded operating revenue and operating profit of 44.2 billion KRW and -1.4 billion KRW, respectively, in the first quarter. Although the 63% year-on-year decrease in package tour departures was considered a relatively strong performance, the number sharply declined in April, the start of the second quarter. The expected sales revenue for the second quarter is projected to decrease by 90% year-on-year, with an operating loss of 8.9 billion KRW.

Researcher Lee Ki-hoon of Hana Financial Investment stated, "Currently, overseas travel means trusting the quarantine system of the destination country, but ironically, except for Korea, there are not many options. Even for Hanatour, 86% of operating revenue comes from packages, and the higher the age group, the greater the impact of related diseases, which is also negative."

In a survey conducted by the International Air Transport Association (IATA), about 40% of respondents said they would postpone travel for at least six months until COVID-19 subsides, and about 70% said they would postpone travel indefinitely until conditions improve.

Researcher Lee added, "Considering the long-accumulated overseas travel experience and deferred demand accumulated since after GSOMIA, overseas travel demand is not expected to decrease significantly, so I recommend buying from a mid- to long-term perspective. However, it is important to keep in mind that the adjustment period may be quite prolonged."

This content was produced with the assistance of AI translation services.