Net profit of South Korea’s second largest foreigners-only casino operator Grand Korea Leisure (GKL) plunged by 29.7 percent in 2017 as China’s restrictions on package tours to South Korea remained in place.
In a filing to the Korea Exchange, GKL announced that its net profit dropped to KRW80.54 billion (US$74.1 million) in 2017 compared to the KRW114.34 billion ($105.19 million) profit in 2016.
GKL, which operates three foreigners-only Seven Luck gaming venues, has been battered by Beijing’s decision in early 2017 to restrict Chinese group tours to Korea to protest the deployment of a U.S. missile system on Korean soil.
Travel agencies hoped that the icy relationship between Beijing and Seoul would thaw following the election of South Korean President Moon Jae-in and the scrapping of further missile deployment plans in the country. But in December, the Chinese government reportedly changed its mind about loosening restrictions on package tours to South Korea and rejected applications for group tour visas. The move came after Moon’s state visit to Beijing.
Investment analysts pointed out that GKL’s fourth quarter revenue was proof that the geopolitical tension between Beijing and Seoul still remains.
Data showed that GKL’s net income dropped 58 percent year-on-year to approximately KRW14.20 billion ($13.0 million) in the October to December 2017 period. The latest figures pale in comparison with the KRW34.15 billion ($29.8 million) net income it posted in 2016.
The firm also reported that its aggregate revenue dropped 14.1 percent to KRW127.64 billion ($6.06 million) in the last quarter of 2017 while its operating income was down 57.5 percent to KRW18.35 billion ($871.5 million).
If there’s one consolation, GKL wasn’t the only casino operator that had a rough 2017.
On Wednesday, South Korean casino operator Paradise Co Ltd. alerted the Korea Exchange that the company swung to a KRW11.3 billion ($10.4 million) net loss in 2017, compared to the KRW55.1-billion ($50.7 million) profit recorded in the prior year.
Paradise Co also reported that its revenue declined 3.9 percent to KRW668.0 billion ($615.4 million) for full-year 2017.
Paradise operates four foreigners-only casinos, including Paradise City (pictured) in Incheon, which became the country’s first major integrated resort when it opened last April. Paradise also operates the Jeju Grand casino on Jeju island, which is home to half of South Korea’s casinos.