Goliath has travel agents quivering

Smaller travel agencies are forming a united front to defend against a tidal wave ― the new giant travel agency, Lotte JTB.
Members of the Korea Tourism Association, Overseas Travel Committee and Domestic Travel Committee gathered at the association office yesterday to protest the giant newcomer, which will start business in July.
Lotte Group, a conglomerate operating in Japan and Korea, recently announced that it will expand its business portfolio to travel by establishing Lotte JTB with Japan-based JTB, one of the world’s biggest travel agencies.
“If JTB begins to sell air tickets and tour products at below-market prices to Korean overseas travelers, it will deal a blow to the smaller companies as well as the entire industry,” said Shin Joong-mok, chairman of the association.
“A big company coming into the market is not against the law, but because of it more than 10,000 small travel agencies will go out of business,” the chairman said.
The biggest thing Shin is worried about is human resources.
With all the scouting from conglomerate companies, the number of employees moving from one agency to another will increase noticeably. “Wages offered by companies will definitely go up, but not for all,” Shin said.
One expert, however, said it’s simply survival of the fittest in the market.
“Compared to the size of the industry, local travel agencies were not as developed as they should be,” said the analyst, who declined to be named.
“They made profits by paying low wages rather than developing better programs.” Korea’s travel industry was estimated at $9.4 billion in 2006. The state-run Korean Tourism Organization predicts the market to grow 0.6 percent annually.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]