November 23, 2024

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[THE INVESTOR] China’s ban on travel agencies from selling tour packages to South Korea in retaliation for THAAD deployment is likely to lead to losses of up to US$10 billion for the tourism industry, according to reports.

Out of 17.2 million foreign visitors that came to the country last year, almost half were Chinese at 8.06 million, according to the data released by the Korea Tourism Organization on March 3. 

Since about 40 percent of tourists from China come via tour packages, the ban is expected to cut the inbound tourists by 50 percent as Chinese authorities can easily disallow selling bundles of flights and hotels as well.
Considering that a Chinese tourist spent an average US$2,391 in South Korea in 2015, this would lead up to US$9.64 billion loss.

Even though independent travelers might be able to visit South Korea, market watchers expect the duty-free industry to suffer a fatal blow, as it is heavily dependent on Chinese tourists who are estimated to account for approximately 70 percent of their revenue. The duty-free sales last year reached 12.27 trillion won. 

The country’s largest duty-free store operator Lotte will suffer the most as the retailer also has the highest revenue ratio of Chinese visitors.
Its website was shut down on March 2 for three hours by unidentified hackers, who the company’s cybersecurity experts traced to a location in China. Its website generates an average of US$3.5 million a day, said Lotte Duty Free spokesperson. 

By Hwang You-mee (glamazon@heraldcorp.com)