The growth potential of Korea’s tourism industry in the rapidly changing international environment is where we need to put our focus on. The international tourism market started to pay attention to the Korean market after the liberalization of overseas trips in 1988. Moreover, following the 2002 World Cup hosted by Seoul and Tokyo, the Korean tourism market has been growing continuously. This article outlines the major trends of Korea’s inbound travel market, outbound travel market, domestic travel market and the future prospects of the overall Korean tourism market.

Status of Korea’s Tourism Market

As of 2016, the size of the inbound travel market was USD 17.2 billion, that of the outbound travel market was USD 23.7 billion, and that of the domestic travel market was USD 22.7 billion. Korea’s tourism market is rapidly growing due to the opening up of China’s tourism market and the rise in the number of low-cost carriers. The market showed a decline in 2017 due to the impact of the deployment of the THAAD system, but has been recovering since January 2018. In particular, the improved relationship between the two Koreas based on the inter-Korean Summit and the U.S.-North Korea Summit increased the prospects for peace, leading to the recovery of the Korean tourism market.

In regard to the inbound travel market, about 17.27 million people visited Korea in 2016, and the tourism income was about USD 17.2 billion. Per capita expenditure of foreign tourists was USD 1,000, and is continuously growing. In 2015, the average expenditure per person was about USD 1,141 thanks to the increased number of Chinese tourists. Later on, it showed decline, but is now back on the track to recovery.

Source: Visitor arrival and Korean departure statistics from Ministry of Justice, Tourism balance of payments from the Bank of Korea, The Korea Tourism Knowledge & Information System (www.tour.go.kr)

About 8 million Chinese tourists visited Korea in 2016, but the number decreased to 4.17 million in 2017 due to the deployment of THAAD. As of 2017, 2.31 million tourists were from Japan, 940,000 from Taiwan, 870,000 from the U.S., and 1.58 million from the four Southeast Asian countries of Thailand, the Philippines, Vietnam and Malaysia. Along with the regional tourism market in China and Japan, the inbound travel market is implementing expansion to the Southeast Asian market (Thailand, the Philippines, Vietnam, Malaysia, Indonesia) through diversification policies of the inbound travel market, in order to secure market stability amidst the changing international environment.

Source: Korea Tourism Organization, Nation overseas tourist’s major destination survey (May 2018)

The outbound travel market grew from 22.38 million tourists in 2016 to 26.5 million in 2017. In 2017, the market recorded the largest amount yet, of USD 27 billion. The growth of the average expenditure per capita traveling abroad has rather slowed, but those tourists are spending over USD 1,000 every year on overseas travel.

Source: Visitor arrival and Korean departure statistics from Ministry of Justice, Tourism balance of payments from the Bank of Korea, The Korea Tourism Knowledge & Information System (www.tour.go.kr)

The largest number of tourists visited Japan and China, the main travel destinations for Koreans, and more are now visiting Taiwan, Hong Kong, Thailand and Singapore thanks to low-cost airlines providing flights to such destinations taking less than 4 hours by flight. In 2016, due to a worsening relationship with China because of the deployment of THAAD, Korean tourists visiting Japan rapidly increased to 7.14 million, and those visiting Vietnam increased to 2.14 million.

Source: Korea Tourism Organization, Nation overseas tourist’s major destination survey (May 2018)

As for the domestic travel market, the number of domestic tourists, number of trips, total cost and total number of travel days have been increasing constantly for the last three years. The number of trips and the total cost increased by 9.4 percent and 8.0 percent respectively, showing that the domestic travel market is growing. The demand and expenditure in the market is expected to increase continuously since the central and local governments are promoting various support policies for the growth of local tourism.

In terms of the number of visitors to the top 10 recreational leisure facilities in 2017, the number of visitors in 2017 was about 17.77 million, down from 18.39 million in 2016.

Source: Korea Culture & Tourism Institute, No. of Visitors to Major Tour Sites (The Korea Tourism Knowledge & Information System)

Prospects of Korea’s Tourism Market

Recently, thanks to the improved relationship between the two Koreas, there have been positive signs for the recovery of the inbound travel market from China and Japan, as well as for the growth of the domestic tourism market in the short term. As of June 2018, the market is showing clear signs of recovery as compared to 2017.

In the mid to long term perspective, the inbound travel market from the world is also expected to grow thanks to the increased number of Chinese visitors stemming from an improved relationship with China as well as with North Korea. Furthermore, the establishment of the peace regime and the declaration to the end of war will place the Korean tourism market at a crucial turning point. The tourism cooperation project of the two Koreas is likely to resume, and the transcontinental railway project between China, Russia and the two Koreas is expected to be accelerated.

The Korean government and local governments are expanding financial support to revitalize regional airports and to expand tourist accommodation infrastructure as well as tourism contents. The inbound travel market is expected to receive more financial support to develop other tourism-focused cities in addition to Seoul, Busan and Jeju, and to foster various activities of regional tourism marketing organizations to attract overseas visitors.

By Hyojae Joun
Director, Tourism Industry Research Division
Korea Culture and Tourism Institute
hyojae.joun@gmail.com