The announcement of a 30-day mutual visa exemption arrangement between Singapore and China, set to take effect in early 2024, marks a significant milestone in the recovery and growth of the tourism sector.
This development is particularly promising for businesses like Jumbo Group Ltd (SGX: 42R), a major player in Singapore’s food and beverage industry.
How does visa-free access boost the return of Chinese tourists?
The extended visa-free access is expected to boost the return of Chinese tourists to Singapore.
The arrangement allows Singaporeans to stay up to 30 days in mainland China, and reciprocally, Chinese visitors can now stay in Singapore for the same duration.
This extension is significant compared to the previous 15-day visa-free stay, potentially doubling the time tourists spend in the country.
The enthusiasm for this mutual visa exemption is evident.
Strong interest among Chinese tourists to visit Singapore
On Weibo, a popular microblogging site in China, the topic garnered 120 million views and sparked 26,000 discussion threads, highlighting the immense interest from the Chinese public.
This excitement is not just virtual.
Travel platforms like Trip.com and Ctrip reported an 80% surge in searches for Singapore, with flight and hotel searches also seeing considerable increases.
This trend suggests a pent-up demand for travel to Singapore is likely in 2024.
How will Jumbo Group benefit from this trend?
Jumbo Group, with its network of seafood restaurants, including the iconic Jumbo Seafood brand, is well-positioned to benefit from the increased foot traffic of Chinese tourists.
The impact of Chinese tourism on Singapore’s economy cannot be overstated.
Prior to the pandemic, Chinese tourists were a significant contributor to the tourism sector.
The average length of stay for Chinese visitors in Singapore was around 5.2 days, according to the Singapore Tourism Board.
With the new visa exemption, this duration is likely to increase, offering more opportunities for extended dining experiences at Jumbo Group’s outlets.
The extended stay of tourists will not only increase the frequency of restaurant visits but also provide an opportunity for Jumbo Group to showcase its diverse culinary offerings, potentially leading to higher per-customer spending.
Jumbo Group’s strong presence in popular tourist areas and its reputation for authentic Singaporean seafood make it a go-to destination for many tourists, particularly those from China.
The group’s focus on quality and service has earned it a loyal customer base, which is likely to expand with the anticipated increase in Chinese tourists.
Singapore is the main revenue contributor
Jumbo Group’s presence spans across Singapore, China and Taiwan, with restaurants in 13 cities across Asia.
Despite its diverse presence, Singapore is the largest contributor to the Group’s total revenue at 83.0%, followed by China at 14.6% and Taiwan at 2.4%, as per the latest annual report for 2023.
At the beginning of this year, Jumbo Group opened two food outlets in Singapore’s Clarke Quay Central Mall. They are Ng Ah Sio Bak Kut Teh and Tsui Wah outlets.
With resilient domestic demand, increased tourist footfall and selective price hikes, this should support Jumbo Group’s earnings this year.
Inflation and China’s slowdown could dampen growth prospects
Optimism surrounds Jumbo Group’s prospects for growth in 2024, yet the company faces notable challenges.
Persistent inflation and the hike in Goods and Services Tax (GST) in Singapore may lead to a decline in dining out, particularly among local residents.
Additionally, the softening of consumer spending in China, coupled with the closure of the Xi’an outlet, might negatively impact the company’s earnings.
Visa exemption between Singapore and China a boon for Jumbo Group
The mutual visa exemption between Singapore and China is a boon for the tourism and hospitality sectors.
For Jumbo Group, this presents a golden opportunity to enhance its market position, increase revenue, and further cement its status as a leader in Singapore’s culinary landscape.
As travel resumes and Chinese tourists return in greater numbers, Jumbo Group stands ready to welcome them with open arms and a feast of flavours.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
