Summary
- Market Recovery: As of December 2023, outbound travel from Korea reached 103% of pre-pandemic levels, signaling a full recovery in 2024.
- Stock Sensitivity: Leading tourism companies, HanaTour (039130:KS) and ModeTour (080160:KQ), showed sensitivity to economic conditions, not fully aligning with the recovery in outbound travel.
- Consumer preferences: Consumer preferences: Whereas the early stages of the travel demand recovery were characterised by a preference for spontaneous travel, products that emphasise price competitiveness or luxury premium tours are gaining popularity, creating demand for packaged tours.
- Transaction Data Insights: Aicel’s consumer transaction data highlights a steady increase in the average basket price, reflecting the growing demand for premium travel packages.
Introduction
The Korean tourism sector is experiencing a resurgence, with outbound travel numbers nearing pre-pandemic levels. This recovery is reflected in the consumer transaction data collected by Aicel Technologies, providing a comprehensive view of the market dynamics affecting tourism stocks. This article explores the insights derived from this data, focusing on leading tourism companies and consumer behavior trends.
Market Dynamics
Recovery in Outbound Travel
In the latter half of 2023, the number of outbound travelers from Korea approached pre-pandemic levels. By December 2023, approximately 2.4 million outbound travelers were recorded, which is about 103% of the figures from December 2019. This indicates a full recovery in outbound travel for 2024.
Sensitivity of Tourism Stocks
Despite the recovery in travel numbers, the stock prices of leading domestic tour companies, HanaTour (039130:KS) and ModeTour (080160:KQ), did not fully align with this trend in 2023. This disparity suggests that these companies are sensitive to broader economic conditions. During the peak vaccination period in 2021, both companies had a higher market capitalization, highlighting the impact of economic sentiment on their stock performance.
Consumer Preferences and Behavior
Shift from free travel to premium, competitively priced package tours
The recovery of outbound passengers for both HanaTour and ModeTour appears slower compared to the total outbound traveler figures. The decline in transaction amounts below pre-pandemic levels is likely due to the normalization of overseas travel, with a focus on free travel. However, recent data indicates a recovery in package outbound passengers, driven by competitive pricing and reliable sourcing. Young travelers and senior citizens are increasingly opting for package tours, attracted by their affordability and convenience.
Rise in Premium Products
The average selling price of tours has risen due to the growing popularity of premium products. Aicel’s consumer transaction data shows a steady increase in the basket price, reflecting a shift towards higher-value travel experiences. This trend is supported by the overall demand, which has been stimulated by a decline in the USD/KRW exchange rate.
Insights from Aicel's Transaction Data
Weekly Market Updates
Aicel Technologies provides weekly updates on consumer transactions, providing a quick snapshot of market dynamics and consumer preferences. This data is critical to understanding the changing landscape of the tourism sector and the performance of key tourism stocks.
Investment Insights
Given the signs of weakened domestic consumption this year, it is advisable for investors to review Aicel’s data to gain further insights into tour company investments. This information can help determine the demand for package tours and guide strategic investment decisions in the tourism sector.
Conclusion
The recovery of the Korean tourism sector, driven by a resurgence in outbound travel and shifting consumer preferences, presents significant opportunities for investors. Companies like HanaTour and ModeTour are well-positioned to capitalize on these trends, despite their sensitivity to economic conditions. Aicel Technologies' transaction data provides essential insights into these market dynamics, helping investors navigate the competitive landscape and make informed decisions.
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