Hotel Prices in Seoul Soar: GS P&L Smiles as Inbound Tourism Surges [Weekend Money]

Parnas GS P&L Continues to See Rising Hotel Rates

"Profitability Improvement Expected to Widen as Peak Season Approaches"

There are expectations that GS P&L, which owns the 5-star hotel 'Parnas' and the premium business hotel brand 'Nine Tree', will maximize its performance leverage amid the full-fledged recovery of inbound tourism. As the company holds hotel assets in prime locations with excellent accessibility to urban tourist destinations and airports, it can benefit from both stable occupancy rates and rising average daily rates.

Hwa Jeong Lee, a researcher at NH Investment & Securities, commented on GS P&L, saying, "As the company has a business model centered on hotels, it is expected to be one of the biggest beneficiaries of inbound growth," and added, "Its major establishments are located near city tourist attractions and in the Gangnam area adjacent to airport terminals, which differentiates it in terms of stable occupancy rates and average daily rate growth."

Lee also noted, "The recent sluggish stock performance is due to low market interest in small-cap stocks," and diagnosed, "With high growth in sales indicators and stabilization of operating expenses occurring simultaneously, the leverage during peak season will be maximized." She added, "A rebound in the stock price is only a matter of time."

The market especially sees the increase in foreign tourists as a key driver for GS P&L's performance improvement. This is because the number of overseas visitors to Korea has been recovering rapidly, and with the growing proportion of long-stay tourists, the average daily rates at major hotels in Seoul are continuing to rise.

NH Investment & Securities forecasts that for the second quarter of this year, GS P&L's consolidated sales will reach 156.2 billion won, up 39% year-on-year, and operating profit will rise to 22.4 billion won, a 93% increase from the previous year. This is in line with market expectations.

Although there was a temporary operational gap due to the renovation of the west wing of Jeju Parnas, the overall upward trend in average daily rates is expected to offset this. While the annual property tax burden is estimated to rise by a mid-10% range compared to last year, the improvement in profitability from higher average daily rates is considered to outweigh the additional costs.

In particular, the growth of the 5-star hotel segment is expected to be notable. There is analysis that the upward trend in average daily rates is steep, especially at key hotels adjacent to airport terminals such as Grand InterContinental and Westin.

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

She further emphasized, "The strong growth in average daily rates, which surpasses the fixed cost burden, will translate into profit leverage. If the peak season effect is fully reflected, the improvement in profitability could expand even further."

The mid-range hotel brand Nine Tree is also projected to continue its stable growth trend. This is because the upward trend in average daily rates is persisting at establishments near key tourist spots such as Myeong-dong, Insadong, and Dongdaemun.

Currently, it is analyzed that Nine Tree hotels have a high proportion of demand from short-haul visitors from China and Japan, as well as domestic travelers. As a result, demand is centered mainly around weekends, but as inbound growth among short-haul tourists is expected to continue this year, demand stability is also anticipated to strengthen.

Lee concluded, "Despite the current stock price being in undervalued territory relative to the business environment and fundamentals, the ongoing recovery in inbound tourism will further raise the possibility of both performance and corporate value reassessment."

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