Shares in South Korean casino operators Paradise Company Limited and Grand Korea Leisure Company Limited have fallen by 5.02% and 6.80% respectively after news emerged early this morning that the Chinese government may be about to institute a six-month curb on cheap travel packages.
According to a report from GGRAsia citing the Bloomberg news service, Chinese travel agents have allegedly been instructed to cut the numbers of outbound tourists traveling to South Korea by more than 20% beginning next month with the curb not expected to end until April.
South Korea has 17 casinos of which 16 are open only to foreigners with Chinese gamblers representing an important source of revenues as tourists from the giant nation made up 48% of arrivals in September. Korea Exchange-listed Paradise Company Limited operates foreigner-only casinos in the cities of Seoul, Busan and Incheon as well as two similar venues on Jeju Island while similarly-listed Grand Korea Leisure Company Limited is responsible for two foreigner-only venues in Seoul as well as an enterprise in Busan catering to non-South Koreans.
Bloomberg cited Korea Tourism Organization official Kim Yeong Ju as its source for the news on the curb while Seoul newspaper JoongAng Ilbo reportedly supplied the percentage figure. It explained that South Korea welcomed 13.2 million foreign visitors last year and these produced aggregated receipts of approximately $15.2 billion.
Citing an August 1 story from China’s English-language Global Times newspaper, GGRAsia reported that Beijing’s rumored policy of limiting the numbers of Chinese nationals traveling to South Korea could be down to Seoul’s decision in July to deploy the Terminal High Altitude Area Defense (THAAD) anti-missile system. President Park Geun-Hye reportedly agreed to the United States-supplied scheme in response to moves from North Korea, which is a neighbor and long-time ally of China, to further develop its offensive missile capabilities.
However, South Korean newspaper Korea JoongAn Daily cited the Korea Tourism Organization on August 13 as reporting that the missile defence decision had not made any difference to the numbers of Chinese nationals visiting the country.
Whatever the reason for the rumoured curb, there is a precedent for China taking regulatory action regarding cheap travel packages being offered to its citizens. The China National Tourism Administration instituted a ban on the country’s domestic travel agencies “organising tourism activities and luring tourists with unreasonably low prices” in the autumn of 2013. GGRAsia reported that this was understood to be in reference to “zero-fares” tours, which involve no upfront charges with tour operators earning money by pressuring tourists to spend at partner shops.