Hotels in South Korea are booming thanks to a surge in foreign visitors on a weaker won currency, while domestic travel agencies are suffering from a decline in overseas vacations among locals amid an economic slowdown.
The number of foreign visitors rose 18% to 2.3 million in January and February from a year earlier, government data showed.
That came on the sustained craze for cultural products such as K-pop and local food, as well as the resumption of business trips, which had been suspended due to former President Yoon Suk Yeol’s surprise declaration of martial law on Dec. 3, 2024.
The South Korean won lost 8.4% against the dollar on average in the first quarter compared to the same period in 2024, according to central bank data, reducing travel costs for foreigners.
Foreign visitors are expected to rise further as the country plans to exempt visas for Chinese group tourists in the second half, industry sources in Seoul said.
POWER UP EARNINGS
The growth boosted earnings of hotels, resorts and casinos, industry sources said.
Sales of major hotels such as Hotel Shilla Co. and Josun Hotel are estimated to have grown in the first quarter from a year earlier, defying concern that their earnings peaked last year.
“We are doing so well that our rooms are virtually fully booked for April,” said an official at Four Seasons Hotel Ltd. in Seoul.
Paradise Co., the country’s largest foreigners-only casino operator, is expected to announce an earning surprise in the first quarter.
FALLING OUTBOUND TRAVELERS
Demand for international travel among locals is falling as Asia’s fourth-largest economy is struggling from US President Donald Trump’s tariffs.
Consumer sentiment remained soured amid the ongoing domestic political uncertainties and in the aftermath of a deadly plane crash in December.
The number of outbound group travelers on package tours tumbled 20% in the first quarter from a year earlier with those to long-haul destinations such as Europe and the US down, according to industry sources on Monday.
Hanatour Service Inc., South Korea’s largest travel agency, saw a 4.4% drop in outbound travelers during the first three months of the year as its customers for international trips fell more than 10% in February and March after growth in January.
“We suffered the lagging effect of the martial law and the plane crash late last year,” said a Hanatour official.
Demand for overseas travel does not weaken immediately after such events due to penalties, which customers have to pay for last-minute cancellations, industry sources said.
A softer won is another burden for South Koreans to go abroad as it usually raises travel costs, they added.
“Overseas travel bookings plunged about 30% this month compared to a similar period last year,” said another travel agency official. “The second quarter will be worse than the first.”
That bolstered concerns over travel agencies’ earnings.
Hanatour’s operating profit is estimated to have fallen more than 40% to 12 billion won ($8.5 million) in the first quarter from a year earlier with sales down 15% to 150 billion won, Hyundai Motor Securities Co. said in a research note.
By Jae-Kwang Ahn
ahnjk@hankyung.com
Jongwoo Cheon edited this article.
