Domestic tourism tanks as travelers flock to cost-effective countries

Economy

Domestic tourism tanks as travelers flock to cost-effective countries

Published: 29 Aug. 2024, 06:00

Tourists crowd Gimpo International Airport on Aug. 15, Korea's Liberation Day. [NEWS1]

Domestic travel is on the decline as high food and accommodation costs drive many Korean tourists to neighboring regions like Japan and Southeast Asian nations.

The nation's total spending on domestic travel in July came to 3.27 trillion won ($2.45 billion), a decrease of 31.81 billion won compared to the same period last year, according to data from the Korea Tourism Organization. This figure marks the third-lowest for the month after those of the pandemic-stricken years 2020 and 2021.

Outbound tourism rose by 20.3 percent, reaching 7.68 million, while domestic travel dropped by 0.9 percent to 2.57 million according to data from the Ministry of Land, Infrastructure and Transport.

"This summer was a complete flop," said an accommodation owner surnamed Lee in Pyeongchang County, Gangwon. "Normally, we see a surge in reservations for about six weeks between July 15 and Aug. 24. But this year, after a brief spike, bookings have plummeted, reducing our revenue to a mere five million won — just a third of what we usually make during this season."

"It's not just me," Lee added. "Many small business owners in this area are experiencing the same downturn. I figured out that many travelers have opted for Southeast Asian destinations instead of domestic trips."

Rising inflation has further exacerbated the challenges the tourism industry is facing, as consumers tighten their purse strings.

None of the 17 major cities and provinces in Korea reported an increase in tourism spending. In fact, six of these regions saw a rise in the number of travelers but a decline in spending. Sejong, for example, experienced a 4 percent increase in tourist arrivals but a significant 8.8 percent drop in spending. Similarly, Daejeon saw a 2.9 percent increase in tourists but an 8 percent decrease in tourism spending.

"Inflation affects middle- and low-income individuals the most, leading them to reduce their spending. As travel is often considered a discretionary expense, many people choose to either forgo travel entirely or minimize their tourism spending," said Lee Eun-hee, a consumer science professor at Inha University.

Scorching heat has also deterred many from vacationing. Korea experienced the longest streak of tropical nights on record last month, lasting 8.8 days — three times the average. “I decided to postpone my vacation planned for late July and early August due to the extreme heat,” said one traveler.

The stagnant domestic tourism industry during the summer vacation season has raised concerns about the prolonged slump in the domestic market. Korea's retail sales index for the second quarter of this year fell 2.9 percent on year, marking the largest decline since 2009.

Retail trade figures have been on a downward trend for nine consecutive quarters since the second quarter of 2022. The Korea Development Institute has lowered the nation’s economic growth outlook to 2.5 percent from 2.6 percent due to lagging domestic consumption.

The government and the conservative People Power Party, in response, have recently announced that they are considering making Armed Forces Day a national holiday to provide people with more opportunities to travel.

BY YI WOO-LIM [yoon.seungjin@joongang.co.kr]