Under normal circumstances, Koreans travel… a lot. As we all know though, now is anything but normal.
Riding the Tiger’s Back
Prior to Covid, the average Korean traveler made 6 trips annually (including domestic and international) – one of the highest rates of leisure travel by nationality, in the world. With outbound travel numbers climbing an astounding 40% in recent years, as more and more middle-class Koreans began flexing their discretionary spending muscle. Mirroring the Asian Tiger’s decades-long rise to affluence, on the back of what’s proven to be one of Asia’s most consistent GDP performances – save for short periods during the Asian Financial Crisis (1997-1998) and the GFC.
Where Koreans were traveling to, also morphed as rising affluence saw a corresponding drop in demand for domestic travel, in favour of more expensive long-haul destinations – for example, nearly 2.5 million Koreans visited the US in 2018 alone.
Tourism’s Role in Korea’s Economy
Prior to Covid, tourism was contributing more than 5% of Korea’s GDP, and worth more than US$17 billion. It also directly accounted for over 1.7 million jobs in hotels, transport, tour agencies, etc., and indirectly for millions more in F&B and the service sector.
Overall things for the sector had been looking very strong, boasting double-digit growth in recent years despite hiccups like China’s 2017 tourism boycott of Korea in retaliation for the country’s planned installation of the US THAAD missile system – ostensibly to protect against incoming North Korean attacks, but perceived as a US-sponsored security threat by China.
Then Came Covid
Obviously, that’s all changed now with incoming foreign tourist arrivals falling by -94% year-on-year for March, while outgoing Korean tourist numbers fell by -93% during the same period. As a country, Korea’s been making a tentative recovery in recent months, but the huge drops in travel have aggregated into a net customer decline of 99% for Korean travel agencies.
In any normal year, July and August is Korea’s peak travel season (both for domestic travelers, and international arrivals). So what can Korea do, not even to salvage the 2020 season, but to save its critically wounded travel industry?
For starters, while analysts estimate Koreans will travel 85% less over the entire year, recent surveys show Koreans on average still intend to take 1.8 trips in 2020, with over 70% saying they plan to take a domestic holiday this year. Both out of practicality, and patriotism with most residents reporting they felt “confident” that Korea’s flattened its curve.
In response, Korean Air has recently added back more than half of its previously canceled domestic routes in anticipation of rebounding local demand.
While at a national level, many big Korean corporates are directly implementing measures to encourage staff to stagger their holidays. An idea which prior to now was relatively novel in Korea’s highly regimented corporates, but has come in direct response to the rise in telecommuting, and more broadly to help prevent potential overcrowding at domestic destinations like Jeju which could then trigger new outbreaks and derail the country’s fragile recovery.
Recent surveys show while 1/3 of Korean working adults plan to vacation as usual this summer, another 1/3 are deliberately staggering their travel to later this year.
The hope is not only will more Koreans travel domestically (keeping their hard-earned Won in-country), but also that Korea can translate its huge, Covid-driven shift to telecommuting into a better longterm work-life balance for its famously hard-worked office staff.
Something Korean President Moon Jae-In has pushed for since taking office in 2017, although originally for a much different reason – wanting to help destress Korean working society – which famously puts in some of the longest office hours in the OECD at more than 2,100 hours per year.
It’s still too early to tell, but could Covid actually be the impetus for a chain of events that ultimately change Koreans relationship with leisure time? It’s a big thing to ponder, but luckily 70% of Koreans have an upcoming (domestic) holiday to clear their head, and think about it all.