South Korea’s travel agencies and duty-free shops will deep further in the negative in money-losing business in the second quarter amid ongoing standstill in air travel due to lingering virus risk.

Korean travel agencies have sold nearly zero outbound travel packages for the summer peak season. Sporadic outbreak contained meaningful recovery in domestic travel.

According to consensus complied by Seoul-based financial data provider FnGuide on Monday, Hanatour Service Inc. is estimated to log an operating loss of 27.5 billion won ($22.4 million) in the second quarter ending June, compared with a profit of 3.6 billion won a year ago, with sales plunging 74.1 percent to 50.1 billion won.

Second-largest travel firm Modetour Network Inc. also is forecast to incur an operating loss of 11.5 billion won in the April-June period, widening from 1.4 billion won three months ago and 200 million won a year earlier. Estimated revenue for the second quarter shriveled 79.3 percent on year to total 14.6 billion won.

Earnings outlook for other agencies that posted losses or smaller gains in the first three months of this year is equally murky.

Korean outbound travelers tumbled 98.6 percent on year to stop at 31,425 in April, and visitors down 98.2 percent to 29,415 amid continued lockdowns and two-week self-quarantine orders for international arrivals across the world.

Domestic carriers started resuming some international routes from June, with some European nations reopening their borders.

Travel packages usually become available from June ahead of the peak summer season for international travels, but this year the booking rate is almost zero.

The Korean government went out to promote travel from June 20 to July 19 by offering 1 million discount tickets for accommodations to boost the demand for domestic travels.

Travel agencies are devising new offers in partnership with local governments and other tourism industry players.

They can hardly be of any help, sending the industry from big to small to seek out survival strategy.

Hanatour Service for the first time since its inception has asked employees to go on unpaid leave for three months starting June. Some of the travel agencies applied for government support their employees, but most of them did not due to the financial burden for the application.

“An estimated 4,000 out of all 18,000 companies have applied for the government support for employees. Nearly 80 percent of local travel firms, small-sized businesses have no choice but to close their doors to save rents and labor costs as it is harder to go bankrupt with no revenue,” said an industry official.

As of the end of May, Hanatour Service shares plunged 20.5 percent to 40,600 won since the beginning of the year, Modetour 32.7 percent, Very Good Tour 17.2 percent, Redcap Tour 16 percent, Yellow Balloon Tour 10 percent, and Lotte Tour Development 4.2 percent.

Duty-free operators are no different.

Lotte Duty Free has shuttered its inner city outlet in Jeju Island from Monday, with Shilla Duty Free’s Jeju Island location. Shinsegae Duty Free shuts down its stores in Gangnam, Seoul and Busan on Sundays and Mondays.

Hotel Shilla, the operator of Shilla Duty Free, is expected to report an operating loss of 43.9 billion won in the second quarter, reversing from a profit of 79.2 billion won a year ago, according to market analysts. Its estimated revenue for the quarter slid 38.9 percent to total 840.9 billion won.

Shinsegae’s operating profit is projected to retreat 80.3 percent on year to 13.4 billion won on sales of 1.24 trillion won, down 17.9 percent from a year earlier.

Hotel Shilla shares lost 12.8 percent up to the end of May this year, and Shinsegae 15.2 percent.

By Pulse

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