Yellow Balloon Co., South Korea’s third-largest travel agency by sales, will put more focus on selling tour package products directly to consumers this year in business-to-consumer (B2C) deals to drive up earnings, the company’s CEO has said.
Yellow Balloon said it likely shifted to an operating profit for all of 2023 after reporting operating losses for four consecutive years through 2022 due mainly to the COVID-19 pandemic.
“The company achieved a meaningful result, including a turnaround (in terms of operating profit), last year,” the company’s CEO Kim Jin-kook said in a recent interview with Yonhap News Agency.
Helped by increased sales of tour packages, or group tours, Yellow Balloon shifted to an operating profit of 6.38 billion won (US$4.86 million) in the January-September period from an operating loss of 16.19 billion won a year earlier.
Its full-year earnings results are set to be released in March.
In the first half of last year, the company’s tour package sales recovered to more than 70 perc
ent of the pre-pandemic levels in the first six months of 2019, the CEO said.
“Unlike travel agencies, which focus on winning business-to-business deals (through their contracted offline stores), we have mainly sold our products directly to consumers in business-to-consumer deals,” Kim said.
“It has helped us sell our travel packages to consumers at the earliest possible time if we can secure enough hotel rooms and flight tickets for the products.”
Most offline stores contracted with large travel agencies, such as Hanatour Service Inc. and Modetour Inc., were closed for three years through 2022 due to the impact of COVID-19 on the airline and tourism industry.
But the unleashed pent-up demand for travel that was released beginning in early 2023 helped travel agencies resume their operations.
Hanatour swung to an operating profit of 22.89 billion won in the January-September period from an operating loss of 85.21 billion won a year ago. Modetour also shifted to an operating income of 12.48 billion won fro
m an operating loss of 14.23 billion won during the same period, according to regulatory filings.
For Yellow Balloon, higher travel demand among the “MZ generation” through group tour products helped the bottom line last year, the CEO said.
The MZ generation refers collectively to millennials, who were born in the early 1980s to early 1990s, and Generation Z, born in the mid-1990s to early 2000s.
In 2023, many MZ people chose travel agencies’ package products due to cost reasons as travel agencies usually secure flight tickets in large quantities in advance at lower prices.
As for challenges ahead, the executive expected high consumer prices, a weak won and high interest rates to remain “unfavorable” factors for the travel agency this year.
But the company will carry out aggressive marketing to sell more differentiated products for group tours to popular destinations, such as Japan and Southeast Asia, while developing new products to Latin America, Africa and West India, Kim said.
Source: Yonhap News A
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