South Korea has reported a 46% increase in Chinese tourists visiting the country in the first half of 2013 compared to one year earlier. The volume of Chinese tourists has overtaken Japan visitor numbers to the country for the first time. The strength of the South Korean won has resulted in relative travel costs increasing for most incoming tourists. The Chinese have seen disposable incomes increase significantly over recent years and this is enticing an increased volume of tourists to venture to new markets within Asia as the middle classes expand. More than one third of total tourists in South Korea were Chinese travellers for the first six months of 2013.
The South Korean won is now relatively strong against the Japanese Yen. The yen has weakened nearly 7 percent against the won in the first half of 2013 on Japan's aggressive economic policies to revive its economy, making it more expensive for the Japanese to travel to South Korea.
In contrast, the rising disposable incomes of the Chinese combined with a concerted effort by the South Korean government to attract Chinese visitor in conjunction with the relative close proximity to China is all helping to drive increased tourism from China.
According to a new report “Travel and Tourism in South Korea to 2017”, overall, South Korea’s tourism sector accounted for 5.9% of total GDP and according to the World Travel and Tourism Council in 2012, the number of people directly or indirectly employed in the tourism sector represented 6.4% of total employment in South Korea.
South Korea is regarded as offering the best healthcare system in Asia and this is also having an impact on the volume of medical tourists entering the country. In 2012, it was estimated that 80,000 foreign visitors were visiting South Korea for medical purposes.
The changing dynamics of South Korea’s tourism industry is being driven mainly by the strengthening Korean won against the dollar and other world currencies. This has resulted in a big percentage fall in tourists from Japan and other more developed countries as the relative cost of travel in the country increases. China now represents the most popular source of tourists visiting South Korea.
Air travel in South Korea has traditionally been a duopoly with only Korean Air and Asiana Airlines operating in the market for the last 20 years. However, this domination was broken in 2006 by the launch of Jeju Air; South Korea’s first low-cost alternative airline. There are now only two low-cost carriers operating in South Korea being Jeju Air and Eastar Jet.
In terms of hotel chains, Accor represents the largest hotel operator with 10 hotels providing a total of 2800 rooms. In the near future, Accor has announced that the company plans to open three new hotels with the Mercure Ambassador Gangnam 288-room hotel planned to be opened by the middle of 2014, the Ibis Ambassador Insadong scheduled to open in 2014 and the 300-room Novotel Ambassador Seongbuk scheduled to open by 2016.
Travel agency regulations removed restrictions on setting up branch offices for foreign-invested travel agencies in 2009, allowing them to establish branches following direct registration with the Ministry of Culture, Sports and Tourism of Korea. In 2011, Living Social, a US-based e-commerce website, acquired Ticket Monster, one of the largest South Korean websites for daily deals on travel and tourism services.
For more information on the South Korea Tourism market, see the latest research: South Korea Tourism Market
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