Travel stocks such as Hana Tour, Modetour, and Norangpungseon are failing to rise despite the peak season. Unlike in the past, as more people prefer independent travel over package tours, doubts about growth potential are increasing.
On the 21st, Hana Tour closed at 50,200 KRW. This is a 24.74% drop compared to the intraday high of 66,700 KRW recorded on March 2. Modetour and Norangpungseon also closed at 15,850 KRW and 7,210 KRW, down 27.29% and 25.67% respectively from their yearly highs.
Travel stocks have experienced the worst period in the past three years. Due to COVID-19, international flights were halted, causing their performance to plummet. Hana Tour and Modetour recorded losses on a consolidated basis from 2020 through last year. Norangpungseon has been in the red since 2019.
However, from the end of last year, routes to several countries including Japan and Southeast Asia reopened. The number of passengers using international flights increased. In the first half of this year, Incheon International Airport recorded 24,401,190 passengers, which is 69.2% of the 35,258,765 passengers during the same period in 2019 before COVID-19. This is a 52% increase compared to 3,937,404 passengers in the first half of last year.
The travel agencies’ performance also improved. On a consolidated basis, Hana Tour posted an operating profit of 5.6 billion KRW, Modetour 6.3 billion KRW, and Norangpungseon 1.7 billion KRW in the first quarter. This marks a turnaround to profitability compared to the same period last year. However, contrary to the improved performance, their stock prices have continued to decline since the beginning of the year.
The main reason is the lower-than-expected number of outbound travelers. Last month, Hana Tour and Modetour’s total outbound travelers were 195,772 and 102,000 respectively. This represents a 509% and 401% increase compared to the same period last year. Although the percentage increase is significant, it is still insufficient compared to pre-COVID-19 levels. Hana Tour’s figure is only 43% and Modetour’s 41% compared to June 2019 before COVID-19. This remains low compared to Incheon International Airport’s passenger volume, which is close to 70%.
This is interpreted as more people choosing individual travel or using OTAs (Online Travel Agencies) compared to before COVID-19. Woo Jae-hyuk, a researcher at Mirae Asset Securities, said, "Even before COVID-19, there were significant doubts about growth in the package tour market due to the strong performance of global OTAs and the trend toward individual independent travel."
However, the securities industry explains that this is because the main age group for package tours, those aged 40 and above, i.e., middle-aged and older travelers, have not increased. In fact, from January to May 2019, the proportion of travelers aged 41 to 50 ranged from a minimum of 18.7% to a maximum of 20.1%. But during the same period this year, it was only between 16.5% and 18.2%, indicating that middle-aged and older travelers have not yet increased their outbound travel.
Researcher Woo Jae-hyuk emphasized, "The growth of middle-aged and older travelers and travel agencies shows a similar pattern," adding, "Once the travel demand recovery of the middle-aged and older group, the main customer base for package tours, accelerates, the speed of travel agencies’ performance recovery will also increase."
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