Samsung, LG, Hyundai...all these companies are global behemoths who refuse to settle for second best. They are the perfect representation of their home nation South Korea. While the country may be small in area and population terms, it punches well above its weight in the global arena. It can easily rival Japan for the title of Asia’s most advanced economy as it boasts near hundred percent smartphone connectivity and 4G LTE network infrastructure. Conversely, South Korea has cultural wonders like the historic city of Gyeongju, Seogsan Sunrise Peak, Seopjikoji, Haeinsa Temple, Naganeupseong Folk Village, Bulguksa Temple and much more. The country attracts more than 10 million international tourists each year and welcomed 13.2 million in 2015 according to WTO statistics. This made it the 7th most popular tourist destination in Asia.
South Korea Tourism Spend Analytics: Drivers and Restraints
The vast majority of tourists to South Korea come from neighbouring countries like Japan, China, Taiwan and Hong Kong. The biggest driver for South Korean Tourism is the so-called ‘Korean Wave’. There was a sudden spike in the global popularity of Korean pop culture in the late 1990’s. Korean dramas, TV shows and pop music changed from a regional fad into a global phenomenon. This was particularly felt in the neighbouring countries and has even made the Korean government support the industry through subsidies or start-up funding. The stated aim is to make the country a leading culture exporter alongside Japanese and British culture with the objective of unseating the U.S from a nearly century-old pole position.
However, there are a few challenges that can make it difficult to market the vast potential of the South Korean tourism industry to the world. Political tensions due to unresolved disputes with neighbours like North Korea, China and Japan make this region a potential flashpoint that can heat up in the blink of an eye. Tourists from outside East Asia would be very unlikely to visit South Korea during tense times as safety and security are the highest priority. The government might even impose restrictions on travel to and from countries they have political disagreements with. This can be particularly problematic as most of the tourists come from within the region itself.
The second constraint is the deteriorating global economic situation coupled with the spread of global epidemics like the Ebola Virus and the Middle East Respiratory Syndrome (MERS). The latter, in particular, caused mass flight and hotel booking cancellations in the middle of 2015, hitting tourism revenue very hard. While the sector has bounced back, such factors are out of control of the country and it can be affected again by them. The slowing of the Chinese economy is also a big challenge as China accounts for slightly more than a third of the international tourists coming in to South Korea.
South Korea Tourism Spend Analytics: Forecast
As per World Travel & Tourism Council data, the direct contribution of travel and tourism to South Korea’s GDP was KRW 30,046.7 billion (2% of GDP) in 2014 and it is anticipated to rise by 2.9% per annum for the period 2015-2025 to reach KRW 41,467.6 billion (2.2% of GDP) by the end of the decade. Leisure travel accounted for 80.6% of the GDP, compared to 19.4% spent by business travellers. Leisure travel spending should touch KRW 86,475.2 billion by 2025, while business travel spending is estimated to be KRW 21,143.3 billion in the same year. Domestic spending is anticipated to be KRW 74,239.1 in 2025, recording a growth of 2.7% p.a. Visitor exports accounted for KRW 23,600.7 billion (3.1% of total exports) in the year 2014. This is forecast to rise by 3.4% p.a. during 2015-2025. By 2025, nearly 22 million tourists are expected to spend KRW 33,379.4 billion.
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South Korea Tourism Spend Analytics Forecast
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