China’s travel law seen having temporary impact on tourism

The new Chinese travel law that prevents forced shopping trips and extra tour fees for overseas tour groups is having an immediate impact on the Korean tourism market, which has seen the number of Chinese tour groups take a tumble since the law came into effect on Oct. 1.

According to Lotte Tour, a travel agency that handles Chinese tour groups, it has seen a large drop in the number of Chinese tour groups this month.

“It went down drastically by around one-third or one-quarter of the usual,” said a tour operator of the Lotte Tour’s China team, who wished to remain anonymous. The travel agency accepts some 200 groups during peak travel seasons and 70-80 groups off-season.

“I heard the average price for a package tour being sold in China rose by 300,000 won to 400,000 won.”

Chinese tourists are the largest group of foreign tourists in Korea, making up around 42 percent of all foreign tourists as of September, according to the latest tourism statistics released by the Korea Tourism Organization. They are a significant contributor to the increase of foreign arrivals in Korea with a rise of 13.7 percent in 2012 from the previous year, according to KTO figures.

Chinese tourists have also been making up for the large fall in the number of Japanese tourists in Korea, a fall that is largely attributed to the strained diplomatic relations between South Korea and Japan since last year. The number of Japanese tourists decreased by around 20 percent in September this year compared to the same time last year.

The immediate fall in the number of Chinese tourists seems to have put a break on the continued influx of Chinese tourists to Korea.

“If it wasn’t for the revised travel law, Korea would have seen a 50 percent jump in the number of Chinese tourists by the end of this month, compared to the same time last year. But I predict it will remain at around 25 percent because of the new law,” said Han Hwa-jun, director of the China team at the KTO.

According to the industry insiders, package tour prices went up by around 30-40 percent on average ― the average amount of commission tour agencies receive from shops. The price for a package tour to Seoul at China Travel based in Beijing rose by 46 percent from 3,880 yuan to 5,680 yuan ($640-$930) and another agency, China Gwanghui Travel, raised the price of its package by 60 percent from 3,580 yuan to 6,580 yuan, according to the KTO. The sales of package tours dropped between 20 percent and 40 percent.

The market sees the new prices as reflecting real travel costs.

“Travel agencies were able to sell cheap package deals because they could cover the difference in the actual cost of transportation, dining and accommodation and the fee charged through the commissions they received from shops they were in contracts with,” Han explained.

The number of Individual Chinese tourists, on the other hand, remains steady amid the large fall in the number of tour groups.

“Things are different for travel agencies that offer package deals and those that handle individual tourists. We handle individual travelers and don’t experience the impact of the newly revised travel law in China,” said a tour operator at International Travel, based in Jeju, who wished to remain anonymous.

Joy Khan, general manager of Hotel Prince that overlooks Mt. Namsan, one of the major tourist spots in northern Seoul, said the hotel hasn’t experienced any large fall in Chinese tourists, as most customers are individual travelers.

“Chinese customers accounted for 20 percent of our total customers recently, but it fell to 10-15 percent lately,” said Khan. “Most of the individual Chinese travelers are well off, those who are considered to be the top class of Chinese society.”

The Korean tourism market expects the effects of the new travel law to be temporary, and that in the long run, it will make the tourism market more transparent and the number of tourists will recover as they begin to adjust to the new price.

Han anticipates the recovery to come around the Lunar New Year holiday week.

“People need time to adjust to the new price, which will take around three to six months. It won’t take long. It will recover during the Lunar New Year holiday next year which is one of the peak seasons to travel for the Chinese,” Han predicted.

By Lee Woo-young  (wylee@heraldcorp.com)