Continued Turn to Profit in Q1 and Strong Performance Expected in Q2
Domestic comprehensive travel agencies, whose main business is selling outbound (domestic travelers' overseas trips) products, are expected to continue posting profits in the second quarter of this year as demand for overseas travel steadily increases following the endemic phase (periodic outbreaks of infectious diseases). Despite this period typically being classified as the off-season on an annual basis, these agencies have succeeded in defending their performance, raising the likelihood of a significant rebound this year after overcoming the COVID-19 nightmare.
Overseas travelers visiting Incheon International Airport Terminal 1 for the peak summer vacation season are completing their check-in procedures. Photo by Jinhyung Kang aymsdream@
Golden holidays including weekends and public holidays in May and June
Increased demand for short-distance route packages
Improved performance due to increased number of travelers
According to financial information firm FnGuide on the 7th, securities companies estimated that Hana Tour's operating profit for the second quarter would average 4.4 billion KRW, marking a turnaround from an operating loss of 33.7 billion KRW in the same period last year. The average sales forecast was 81.7 billion KRW, expected to increase by 279% compared to 21.6 billion KRW in the same period last year. Modetour's second-quarter operating profit forecast was also analyzed to turn positive, averaging 3 billion KRW compared to an operating loss of 4.9 billion KRW in the same period last year. Its sales forecast was 36.7 billion KRW, a 359% increase from 8.1 billion KRW in the previous year.
The second-quarter performance forecasts for these travel agencies align with the increase in the number of travelers for their main product group, package tours. Hana Tour's second-quarter package travelers numbered approximately 273,000, a 1102% increase compared to the same period last year, while Modetour saw about 185,000 travelers, up 1248%. Although not included in securities companies' performance forecasts, Norangpungsun's second-quarter package product reservation rate also increased by 1200% compared to the same period last year.
An industry insider explained, "The second quarter is generally classified as the off-season for travel on an annual basis, but this year there were golden holidays with consecutive weekends and public holidays in May and June, and demand for package overseas travel centered on short-distance routes such as Japan and Southeast Asia steadily increased. There was also an impact from the resumption of group tours to China starting in the second quarter."
Earlier, major travel agencies including Hana Tour and Modetour all turned profitable in the first quarter of this year. Hana Tour's first-quarter operating profit was 5.6 billion KRW, achieving profitability for the first time in three years and six months since the third quarter of 2019, while Modetour posted an operating profit of 6.3 billion KRW, marking profitability for the first time in three years and nine months. Additionally, Norangpungsun and Chamjoeun Travel recorded operating profits of 1.7 billion KRW and 1.8 billion KRW respectively in the first quarter, achieving profitability for the first time in about three years.
The duty-free area of Incheon International Airport Terminal 1 is bustling with travelers. Photo by Kang Jin-hyung aymsdream@
Peak travel season in the third quarter
Surge in reservations during July-August vacations and Chuseok holidays
Strong performance expected to continue into next year
The travel industry expects further improvement in third-quarter performance, which marks the peak travel season of the year. During July and August, when students have summer vacation, demand for overseas travel by families with children increases, and the relatively long holidays from late September to early October, including the Chuseok holiday and National Foundation Day, lead to more people planning overseas trips.
According to an analysis of flight ticket reservation status by Incheon International Airport Corporation, the expected number of passengers during this summer's peak travel season from the 25th of last month to the 15th of this month is estimated to reach 3,918,855. This averages 178,130 passengers per day, a 183% increase compared to 62,983 passengers during the same period last year. On the previous day, 191,199 travelers used Incheon Airport, the highest number recorded this summer. This level has recovered to about 86% compared to 207,447 passengers in 2019, before the COVID-19 outbreak.
Hana Tour's package travel departure reservations in July increased by 391% compared to the same period last year, with August and September also rising by 460% and 418%, respectively. Modetour's overseas travel reservation rates for August and September rose by 415% and 650% compared to the same period last year. Norangpungsun reported that package travel reservations for September and October, which include the Chuseok holidays, increased by about 700% compared to the previous year.
Securities firms predict that the improved performance trend of major travel agencies will continue beyond the second half of this year into the first half of next year. Due to the weak yen phenomenon, demand for Japan travel packages is steadily increasing, and interest in long-distance routes such as the Americas and Europe is expected to gradually continue into the first half of next year. An industry insider said, "Inquiries about peak season overseas travel are surging, and even mobilizing all internal staff makes it difficult to respond smoothly."
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