Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Airline capacity and utilisation; Arrivals by country of origin; Arrivals by
mode of transport; Arrivals by purpose of visit; Car rental services by
sector; Demand factors; Departures by destination; Departures by mode of
transport; Departures by purpose of visit; Domestic tourism by destination;
Domestic tourism by mode of transport; Tourism receipts and expenditure;
Tourist attractions; Transportation; Travel accommodation; Travel retail
services
Executive summary
1. EXECUTIVE SUMMARY
Drama craze supports inbound tourism
The overwhelming success of South Korean dramas, movies, and music served as a
major tourist magnet in 2005. The increased popularity of Korean popular
culture, known as "Hallyu" or Korean wave, was spurred by the heightened
popularity of dramas such as Winter Sonata and Dae Jang Geum, the latter of
which showed in immense detail Korea's rich history by using striking costumes
and realistic sets. The Korean wave affected intra-regional tourism, mainly
from Singapore, Malaysia, Japan, and China, although US viewers who watched
Korean dramas were also enamoured by the stories and scenery, supporting an
increase in inbound tourism from the US.
Trouble amongst national airlines
Both Korean Air Lines Co Ltd and Asiana Airlines went on strike in 2005,
damaging the airline industry and disrupting the success of tourism throughout
the year. The Asiana strike involved 300 Asiana pilots who chose to take
action during the peak travel time in the summer. Korean Air went on a four
day strike at the end of the year just ahead of the peak Christmas period
following an earlier partial walkout in August 2005. Walkouts such as these
are expensive for the airlines, and with only two airlines heavily dominating
the Korean airline industry, further strikes in the future could potentially
damage what is an otherwise highly successful tourism industry.
Balance of payments increasingly in deficit
Korea's balance of tourism payments was positive in 1999 and 2000, but since
2001 there has been a clear trend towards Koreans spending much more overseas
than is spent domestically. From 2001 to 2005 Korea recorded a net deficit in
balance of tourism payments and by 2005, the tourism balance was in deficit of
more than Won 6.5 trillion. The deficit is due in part to incoming receipts
which have been steadily declining. The other factor driving the gap is that
Koreans are becoming more curious and confident in overseas travel, a trend
which is outperforming growth in inbound tourism.
Domestic tourism gains momentum
Domestic tourism in Korea is undergoing somewhat of a revival. 2003 and 2004
were relatively poor years for domestic tourism as both experienced a decline
in the number of trips. However, holiday taking is on the rise by Koreans,
with non-holiday takers accounting for only 22% of the population in 2005
versus 31% in 2000. Domestic tourist expenditure increased by 33% in current
value terms in 2005 which is well above the 4% to 6% annual range from 2000 to
2004.
Travel accommodation
2004 witnessed the launch of the six-star hotel, which drove activity in the
travel accommodation industry during the latter stages of the review period.
The super deluxe hotel segment was recently complimented with the launch of
two new six star facilities, one in 2004 and the other in 2005. Both six star
hotels are new to Korea, a relative novelty in most developed countries, and
are the only two hotels of their kind in Asia.
Internet sales continue to rise
During the 2000-2005 review period, internet transactions for travel
accommodation grew by over 185% in current value terms. This remarkable growth
continues to increase, albeit at a decreasing rate. In 2000 and 2001, on-line
transaction values were growing by between 28% and 48%. By 2005, this growth
had slowed to 9%. Total travel accommodation internet sales reached Won711
billion with Won290 billion of this represented by hotel bookings. One factor
that may negatively impact the continued growth of on-line transactions in
Korea is the concern of digital identity theft. While no cases have been
reported in the travel industry, sporadic reports in other areas may limit the
extent to which consumers feel comfortable conducting transactions on line.
Three additional casinos scheduled
In 2005, KNTO announced that it would build three additional casinos starting
in 2006. The new casinos would be for foreigners only to attract revenue while
at the same time minimizing growing concern over the negative social
consequences of gambling amongst South Koreans. Authorities and the public are
concerned at the number of gambling addicts amongst the local population that
the Kangwon Land casino is producing and the severity of personal financial
loss. Sources indicate that approximately 10% of visitors are addicts while
each gambler lost an average Won2.5 million in 2005. There are currently 13
casinos exclusively for foreigners nationwide. The Kangwon Land casino is the
only one that admits Korean nationals.
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