Businesses pay a price as the nation mournsAfter the sinking of the Sewol on April 16, travel agencies, transport companies and hotel chains in Korea are bracing for lost bookings during so-called golden week at the start of May, as schools cancel trips and towns postpone spring festivals.
Cinema and theme park ticket sales slumped after the ferry incident, while the central bank said last week it’s monitoring for any impact on economic growth from falling consumption.
The government on Feb. 3 designated May 1 to 11 as a special period for tourism, encouraging schools to take short breaks and providing discount coupons for hotels, attractions and restaurants as part of its plan to boost domestic tourism spending to 30 trillion won ($29 billion) annually by 2017, from 24 trillion won in 2012.
Golden week consists of a Labor Day holiday on Thursday, Children’s Day May 5 and Buddha’s Birthday May 6.
More than two thirds of passengers on board the ferry were a group of 339 students and teachers from Danwon High School in Ansan. They were on a four-day excursion to Jeju island, nicknamed “Korea’s Hawaii” for its volcanic scenery and sandy beaches, a trip made by about 300,000 students a year, according to the island’s government.
“I hear the shipwreck is leading to many cancellations,” said Kim Hyung-jin, deputy director of the Jeju government’s tourism policy division.
Jeju earned 6.5 trillion won from 10.85 million visitors in 2013, according to municipal government data. About 80 percent arrive by plane and the remainder by ferry, Kim said.
Companies operating school tours are among the worst hit. Seventeen municipal education offices across the country have suspended long-distance school trips during the remainder of the first semester through July, the Education Ministry said in a statement on April 22.
The ministry also is discussing whether to permanently stop the trips, often viewed by students as the last few days of fun before a long period of study for university entrance exams, after consultation with teachers, students, parents, and education experts, the ministry said.
Hana Tour shares have fallen 4.6 percent since the close on April 15, the day before the ferry sank. That compares with a 1 percent decline in the benchmark Kospi index.
For Daemyung Leisure Industry, South Korea’s largest condominium operator with 7,748 rooms nationwide, the loss of school bookings means lost revenue from harder-to-fill weekday bookings, according to company official Hwang Young-hun.
The ferry sinking may “weigh on domestic demand,” Kwon Goo-hoon, an economist at Goldman Sachs Group in Seoul, said in a research report last week.
“May is usually a big consumption month with people giving presents to children, parents and teachers,” said Park Sang-hyun, chief economist at HI Investment and Securities in Seoul.
Retailers say shoppers are staying at home rather than seeking spring promotions. Sales at Lotte Department Store fell 1.3 percent April 16-20 compared with the same period last year.
Cinema-goers were also fewer after the ferry incident, the Korean Film Council said.
Tickets sold at Samsung Everland, an amusement park operated by the country’s largest conglomerate, fell by 15 percent to about 38,000 on April 19 compared with the previous Saturday, according to the company.