"Are Seoul Hotel Prices for Real?" Surging Inbound Tourists Bring Smiles to This Company [Weekend Money]

Parnas GS P&L Continues to See Rising Hotel Rates

"Profitability Improvement Expected to Widen as Peak Season Approaches"

GS P&L, which owns the five-star hotel brand "Parnas" and the premium business hotel brand "Nine Tree," is expected to maximize its performance leverage as inbound tourism enters a full-fledged recovery phase. Since the company has secured hotel assets in prime locations with excellent accessibility to urban tourist attractions and airports, it is expected to benefit from both stable occupancy rates and rising average daily rates.

Lee Hwajeong, a researcher at NH Investment & Securities, commented on GS P&L, saying, "As the company operates a hotel-centric business model, it is expected to be the biggest beneficiary of inbound growth. Its major properties are located near urban tourist destinations and the Gangnam airport terminal area, which differentiates the company in terms of both occupancy rate stability and average room rate growth potential."

The researcher added, "The recent sluggish stock price is due to the market's low interest in small-cap stocks. However, with strong top-line growth and stabilized operating costs occurring simultaneously, peak season leverage is expected to be maximized." She further stated, "A stock price rebound is only a matter of time."

The market also views the increase in foreign tourists as a key driver for GS P&L's performance improvement. Not only is the number of overseas visitors to Korea rapidly recovering, but the proportion of long-stay tourists is also increasing, driving up the average daily rates at major hotels in Seoul.

NH Investment & Securities projects that GS P&L's consolidated revenue for the second quarter of this year will reach 156.2 billion won, up 39% from the same period last year, with operating profit expected to rise 93% year-on-year to 22.4 billion won. This is in line with market expectations.

Although there was a temporary operational gap due to the renovation of the west wing guest rooms at Jeju Parnas, the overall upward trend in average daily rates is expected to offset this. While the annual property tax burden is estimated to increase by a mid-10% range compared to last year, it is evaluated that the profitability improvement from higher room rates will more than compensate for this.

In particular, the growth of the five-star hotel segment is expected to stand out. The analysis indicates that room rates at core hotels adjacent to airport terminals, such as the Grand InterContinental and The Westin, are rising sharply.

The researcher noted, "With the increase in long-stay guests, weekday demand is also being stably maintained. The pace of business normalization at The Westin Seoul, which reopened in September last year, is exceeding initial expectations."

She emphasized, "The robust growth of room rates, surpassing the burden of fixed costs, will translate into operating leverage. If the peak season effect is fully reflected, the extent of profitability improvement is likely to expand even further."

The mid-range hotel brand Nine Tree is also expected to continue its steady growth. This is due to the sustained upward trend in room rates at properties located near key tourist areas such as Myeong-dong, Insa-dong, and Dongdaemun.

Currently, Nine Tree Hotels are analyzed to have a high proportion of demand from short-haul visitors, such as those from China and Japan, as well as domestic travelers. As a result, demand is concentrated on weekends. However, with inbound growth among short-haul tourists expected to continue this year, demand stability is anticipated to further strengthen.

The researcher concluded, "Given the current stock price remains undervalued relative to the business environment and fundamentals, the continued recovery in inbound tourism will likely lead to both improved earnings and a reassessment of corporate value."

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