[Edaily Reporter Kim Kyung-eun] #Hotel Shilla is trading higher in early trading on expectations of improved earnings driven by increased spending by foreign tourists.

According to MP Doctor on the 18th, as of 9:14 a.m. today, Hotel Shilla is trading at 60,200 won, up 2,400 won (4.15%) from the previous trading day.

This is interpreted as reflecting expectations of improved profitability driven by the growing number of foreign tourists. According to the Korea Tourism Organization, card spending by foreign tourists visiting Korea last month reached 2.1222 trillion won. This represents a 67.1% increase year-over-year and marks the first time the figure has exceeded 2 trillion won.

Hyundai Motor Securities raised its target price for Hotel Shilla from 59,000 won to 70,000 won today.

Kim Hyun-seok, an analyst at Hyundai Motor Securities, said “In the first quarter, the duty-free division achieved an operating profit for the first time in seven quarters, driven by improved profitability at downtown stores and the reflection of rent reductions for overseas airport duty-free shops—which had been deferred from the fourth quarter of last year,” he said. “Starting in the second quarter, profitability is expected to improve in earnest due to rent savings resulting from the withdrawal from the DF1 zone at Incheon International Airport and the termination of the contract for the Macau International Airport store.”

He explained, “While it is true that foreign tourists’ shopping channels are diversifying, we view the increasing share of Chinese tourists—the main customers of downtown duty-free stores—as a positive factor,” adding, “Although the share of Chinese tourists among all foreign visitors had declined to around 5% in 2022, it has expanded to about 30% as of the first quarter.”

He also forecast that the environment favorable to inbound (visits to Korea) demand would continue in the hotel sector. Analyst Kim noted, “Since the second quarter of 2021, the number of inbound foreign tourists has been increasing year-over-year for 20 consecutive quarters,” adding, “Given that the weak economic conditions are also persisting, inbound demand from foreign tourists is expected to remain robust in the second half of the year, and the favorable environment for the hotel sector is likely to continue.”