Record Foreign Tourist Boom... GKL Alone Sees Results "Go in Reverse"

Operating Profit Falls 44% to KRW 9.6 Billion in Q3
Contrasts With Competitors' Upward Trend
Limited Revenue Beyond Casinos... Rising Costs, Including Labor
Poor Results Reflected in Share Price
Hits 52-Week Low... Brokerage Cuts Target Price

Grand Korea Leisure (GKL), a state-run tourism company that operates Seven Luck, a casino exclusively for foreign visitors, posted disappointing results despite a favorable market environment in which the number of foreign tourists visiting Korea reached a record high. While competitors’ results are rebounding, GKL has seen a decline in visitors and a sharp deterioration in profitability. Its share price is hovering near an all-time low, reflecting negative market sentiment about its outlook: its operating infrastructure is limited to casinos, its marketing spending to attract customers has failed to improve results, and management costs, including labor expenses, are rising.

Grand Korea Leisure (GKL) headquarters. Courtesy of GKL.

According to the Financial Supervisory Service’s electronic disclosure system on November 12, GKL’s consolidated operating profit for the third quarter of this year was tentatively tallied at KRW 9.6 billion, down 44.4% from a year earlier. Revenue was KRW 109.7 billion, little changed from the KRW 109.4 billion recorded in the third quarter of last year. This contrasts with competitor Paradise, whose third-quarter revenue and operating profit rose 22% and 62.3%, respectively, from the same period last year, to KRW 351.7 billion and KRW 64.1 billion. Lotte Tour Development has yet to announce its quarterly results, but the market consensus for its third-quarter revenue and operating profit points to year-over-year declines of 5% and 24%, respectively. However, expectations are that this will be a temporary slump, given that Lotte Tour Development had continued to post record quarterly results through recently. GKL’s results are effectively moving in the opposite direction.

This trend was also evident in the October results of the three listed casinos exclusively serving foreign visitors. The four properties operated by Paradise generated casino revenue of KRW 82.1 billion in October, up 12.8% year over year. Lotte Tour Development posted a 24.1% increase to KRW 62.5 billion, setting an all-time high and becoming the first in Korea’s casino industry to exceed KRW 60 billion in monthly revenue at a single property. During the same period, GKL’s casino revenue rose just 2.5% to KRW 29.3 billion.

Seven Luck. Courtesy of GKL

The number of foreign tourists visiting Korea this year is estimated to have already surpassed the previous record of 20 million, while arrivals from Greater China—a region with a strong base of mass-market casino customers—have increased substantially. Even after GKL increased its investment to attract customers from these markets, it failed to achieve satisfactory results. According to the Ministry of Culture, Sports and Tourism, as of October 27, the number of foreign tourists visiting Korea had surpassed the previous record of 18.94 million. Through the third quarter of this year, cumulative arrivals from Greater China—including China, Taiwan, Hong Kong, and Macau—reached 7.92 million, up 29.1% year over year, leading the increase.

However, cumulative admissions through the third quarter at GKL’s three properties—its two Seven Luck casinos in Seoul, in Gangnam and Yongsan, and its property in Busan—totaled 771,576, down 1.9% from the same period last year. In particular, the number of visitors from China fell 8.71% to 307,539, bringing the cumulative total into negative territory. During this period, GKL spent KRW 54.1 billion on comps—such as transportation, accommodation, and promotional services provided free of charge to high-value customers as part of its marketing activities—to attract more casino visitors. That was a 9% increase from a year earlier, but the impact was limited. Through the first half of this year, the company’s cost of sales reached KRW 177.2 billion, up 10% from the same period last year. Labor costs accounted for KRW 80.8 billion, up 12.8%, adding to the burden of fixed costs.

An industry official noted, “Unlike private competitors that also operate integrated resorts, GKL depends solely on revenue generated at its casino properties, which limits the benefits it can offer customers and its sources of revenue outside casinos. It also faces the added cost of leasing hotels and the geographic disadvantage of having properties relatively far from airports, leaving it with less ability to attract VIPs and other customers.”

This market assessment has also been reflected in the stock market. On November 11, GKL’s share price fell as low as KRW 7,780 intraday, setting a new 52-week low. GKL shares, which started the year at KRW 14,680, had fallen to KRW 7,900 at the close on November 10. The stock continues to trade at an all-time low, below both the KRW 13,000 level it reached in 2021 when operations were suspended due to COVID-19 and KRW 11,040, its lowest level in the past 10 years, recorded in 2024. Lee Hye-in, a researcher at Samsung Securities, lowered GKL’s target price from KRW 10,000 to KRW 9,000, saying, “Rising labor and comp costs are putting greater pressure on profitability, and we expect the trend of rising related costs to continue in the fourth quarter as well.”

GKL said, “To attract casino customers from overseas, we are dispatching employees to major Asian countries, including Japan, Taiwan, Mongolia, and Thailand, to meet with VIP customers. In Greater China, we are continuing our remote marketing activities targeting existing customers to support a recovery in VIP demand. To prevent existing customers from leaving, we plan to hold customer-specific events, including VIP baccarat tournaments by customer and nationality and dinner shows.”

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