Analysis: South Korea's tourism, soft power gains, at risk from extended political crisis

Accor SA

12/12/2024 02:32

* 
      Prolonged political crisis a risk to tourism sector
    

        * 
      Seoul mayor reassures safety amid tourist cancellations
    

        * 
      Korean Wave's soft power jethreatened by instability
    

  
    By Hyunjoo Jin, Lisa Barrington and Heekyong Yang
       SEOUL, Dec 12 (Reuters) - From plastic surgery clinics
to tour firms and hotel chains, South Korea's hospitality sector
is wary of the potential impact of a protracted political
crisis, as some overseas travellers cancel trips following last
week's brief bout of martial law.
    South Korea's travel and tourism industry, which generated
84.7 trillion won ($59.1 billion) in 2023, around 3.8% of GDP,
has held up through previous bumps in the road, including a 2016
presidential impeachment and periodic tensions with North Korea.
    But more than a dozen hospitality and administrative sources
said the army's involvement in the latest political crisis was a
serious development that could deter leisure and business
travel, when the sector is approaching a full recovery in
visitor numbers, which stood at 97% of pre-COVID levels as of
October.
    "There are concerns that safety issues in Seoul would throw
cold water on the tourism industry," Seoul mayor Oh Se-hoon said
on Wednesday while meeting tourism industry officials to discuss
a fall in travel demand.
    "There is a growing number of examples of foreign tourists
cancelling visits to Seoul and shortening their stays," Oh said,
before declaring "Seoul is safe", in English, Chinese and
Japanese to the media.
    Daily life and tourist activities have continued as usual,
despite ongoing large protests, since President Yoon Suk Yeol
rescinded his six hours of martial law on Dec. 4 after
parliament voted it down, with analysts noting that South
Korea's institutional checks and balances seem to be holding up.
    Some tourists have since cancelled bookings, albeit not in
great numbers, while others are enquiring whether they could
pull out should the situation change, travel and hospitality
sources said.
    Accor hotel group, which includes the Fairmont and Sofitel
brands, said it noted a "slight increase" in cancellation rates
since Dec. 3, around 5% higher than in November.
    The Korea Tourism Start-up Association said on Friday
bookings for the first half of 2025 had already seen a sharp
decline.
        Rooms in previously fully-booked hotels in the capital
Seoul have become available due to cancellations with some
hotels "even lowering their rates and offering special deals to
attract more bookings", said an inbound travel agency that asked
not to be named due to the sensitivity of the matter. 
    A plastic surgery clinic in Seoul's upmarket Gangnam
neighbourhood also said some foreign patients had cancelled
visits since the martial law incident. 
    "We are not worried now, but if this situation continues,
that would have an impact on foreign visitors," a clinic
representative said, declining to be named.
    South Korea is a top global destination for medical and
plastic surgery tourism.
           
    SOFT POWER
    The latest political crisis also threatens to deal a major
blow to the country's brand, which has been improving thanks to
Korean culture and economic success, said Kim Wou-kyung, head of
a government brand promotion agency.
    The explosion to global prominence of South Korean drama,
music and beauty, known as the "Korean Wave", plus a reputation
for safety and global brands such as Samsung, are key forms of
soft power that the government leverages to grow tourist
numbers.
    South Korea hopes to almost double the number of annual
tourists by 2027 from 2019 levels to 30 million.
    Part of the strategy is also to focus on group business
travel for events including conferences and exhibitions, a
sector known as MICE tourism, which could be impacted if the
political crisis continues into early next year, said Ha
Hong-kook, secretary-general at Korea MICE Association. 
        The parliament plans to vote on a motion to impeach Yoon
on Saturday, a week after its first impeachment vote was
defeated.
    "If we get through this immediate, unprecedented period ...
into a clear route to new elections, then I think actually the
impact won't be that bad," said Andrew Gilholm, Director at risk
consultancy Control Risks Group.
    He said the country's reputation "might even be improved"
long-term by displaying how it comes through the problems.
    Su Shu, founder of Chinese firm Moment Travel in Chengdu, is
also sanguine about travel demand for South Korea.    
    "No matter where there is chaos, there will be people who
dare not go," Su said.
    China is the largest source of foreign visitors to South
Korea, followed by Japan and the U.S. 
    
    ($1 = 1,433.0700 won)

 (Reporting by Hyunjoo Jin, Lisa Barrington, Heekyong Yang in
Seoul and Sophie Yu in Beijing; Editing by Miyoung Kim and
Michael Perry)
 ((lisa.barrington@thomsonreuters.com;))