Published : 2013-10-21 19:00
Updated : 2013-10-21 19:00
The Korean tourism industry is beginning to feel the impact of China’s new tourism law that went into effect Oct. 1.
The law is designed to protect outbound Chinese tourists from unscrupulous tour operators. Specifically, it bans travel agencies from selling tour products that look like a bargain as prices are unreasonably low, but are actually a rip-off as they force tourists to go shopping for long hours simply to help local tour operators get kickbacks from shops.
The law had an immediate impact. Chinese travel agencies had to normalize prices as they could no longer rely on the practice of cutting prices below cost and compensating for the losses with back-door operations.
According to Chinese media reports, the prices of tours to Korea during Golden Week, which refers to China’s Oct. 1-7 National Day holiday, jumped by 80 percent from last year. Korean travel agencies say prices rose by 30 to 40 percent on average.
As a result, tourist arrivals from China nosedived. Tour companies here say the number of Chinese visitors more than halved in October compared with August and September.
The steeper-than-expected plunge rattled domestic travel agencies. They are concerned that a rebound may not come early. Should the trend continue for a prolonged period, it would seriously hurt not only tour operators but department stores and other tourist shops.
Recently, Korea witnessed a surge in Chinese arrivals. Last year, Chinese visitors accounted for 25 percent of foreign tourists, or 2.84 million.
In the first half of this year, the share of Chinese visitors shot up to 31 percent, accounting for 1.74 million of the total 5.5 million foreign tourists to Korea. China has emerged as the biggest source of visitors for Korea, replacing Japan.
But it now seems domestic travel agencies have to brace for a slump in Chinese arrivals. The slump could extend into next year if they fail to adapt to the new Chinese tourism law.
Now the Korean government and travel companies need to use the China shock as an opportunity to upgrade the domestic tourism market, which is dominated by low-budget tours.
These products tend to leave a bad impression on foreign tourists as they often force them to go shopping for hours. This is one reason for the continued decline in the number of revisits to Korea.
Travel agencies need to diversify their products and focus on higher-spending Chinese tourists. One good example is the wedding program promoted by the Busan Tourism Organization. The minimum price of the product, which targets affluent newlyweds, is 3.5 million won per person.
The government also needs to help the domestic tourism industry develop the MICE sector, which stands for meetings, incentives, conventions and exhibitions. It is a business-oriented tourism segment.
To attract more business conferences and corporate incentive tours, the government needs to invest in infrastructure such as convention centers, and help diversify tour products.