Group tour regulations slow Chinese visitor growth in South Korea
Published: 28/11/13
Source: ©The Moodie Report
By Martin Moodie
SOUTH KOREA. This year’s surging growth in Chinese visitor arrivals slowed considerably in October, though numbers still rose +22.8% (to 343,273), according to Korea Tourism Organization.
This represented 31.6% of total arrivals, making the Chinese easily the dominant inbound group ahead of the Japanese with 22.5%.
The October numbers reflect critical changes in Chinese group travel regulations introduced on 1 October, which, as reported, are having a sharply negative impact on visitor arrivals at several key Chinese tourist destinations.
The new regulations prohibit outbound group tour packages to any country at what the government considers unreasonably low prices. They also require increased transparency of the tourism products included in such packages.
The laws aim to regulate fairer trading between travel agencies and tourists. In particular they ban agencies from luring tourists with low-priced tours and then boosting profit margins through commissions from stores to which they bring tour groups, or from ancillary payments.
South Korea, a huge market for Chinese group tours, is right in the firing line. For the first ten months of the year, the number of Mainland visitors rose +54.9% year-on-year, with jumps of +70.6% in September and +78.9% in August, just before the new regulations took effect. In October 2102, Chinese arrivals rose +30.2%, underlining the impact of the October 2013 regulations.
The impact is being felt most in South Korea’s downtown duty free stores which have a heavy group tour element. Incheon International Airport is buffered to some extent by its high percentage of transit PRC travellers.
The -9.2% decline in Japanese visitors for October (to 245,021) represents an improvement on the year to date (down -24.1% to 2,309,903) but the state of the Japanese market remains cause for concern among Korean travel retailers.
More positively, the number of outbound Korean travellers rose +7.3% to 1,239,143. For the first ten months, Korean outbound numbers rose by +9.1% to 12,487,958.
As noted, the new regulations are having an immediate impact in other destinations.
Auckland Airport in New Zealand posted a -13.5% fall in Chinese visitor numbers in October. The decline reversed months of strong growth (for the financial year to date Chinese arrivals rose +5.6%).
At Sydney Airport, Chinese traffic rose just +2.8% in October compared with +28% in September – again suggesting that many Chinese travellers timed their trips to precede the regulatory change.
According to the Hong Kong Tourism Board, arrivals from the People’s Republic of China (PRC) rose +11.1% in October, compared with a +18% increase for the first ten months. Nearby Macau saw a slowing from a double-digit increase year-to-date to just +4.8% in October.
The Taiwan Tourism Bureau said that Mainland tourist arrivals in the first six days of October posted a -30.57% decline year-on-year.
Singapore is another key market to be affected. One travel retailer said that the sales growth of PRC shoppers in Singapore had slowed from well over +20% year-on-year to a double-digit increase in October.
Changi Airport Group confirmed to The Moodie Report that there has been “a slight dip” in Singapore-China traffic numbers in October. “We are monitoring this to ascertain the longer-term trend, but the new travel regulations are not expected to have a lasting negative impact,” the airport company added.
In Thailand, Chinese arrivals growth slowed dramatically from +103.56% in September to +17.93% in October. That effect was confirmed by statistics from Bangkok Suvarnabhumi Airport, where Chinese arrivals in October grew by just +6.68% compared to +99.49% in September. Consequently China’s share of arrivals at Suvarnabhumi dropped from 25.42% to 14.86%.
Group tour regulations slow Chinese visitor growth in South Korea
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