Chinese group tours to Korea poised for strong revival

Chinese group tours to South Korea are showing signs of a rebound, about 10 months since Beijing lifted its bans on Chinese group tours to Seoul last summer, raising expectations that the Korean tourism industry is finally on track for full recovery.

On Tuesday morning, dozens of tour buses stopped in front of Lotte Department Store in Myeong-dong, one of Seoul's major department stores, unloading some 4,000 Chinese tourists who flooded into the duty-free shop inside the department store building.

“It was the first time to see over 4,000 Chinese group tourists visiting the shop at once since the COVID-19 pandemic,” said the store worker, adding that the tourists spent hundreds of millions of won on luxury watches and jewelry on the day.

The visitors were employees of a Chinese cosmetics company on an incentive group trip.

This could herald a full recovery of the Korean tourism industry, tourism industry observers said.

"China has been the final piece of the puzzle in the domestic travel industry's recovery,” said an official from the Korean tourism industry. “(Korean tourism companies) are expected to gain earnings momentum with a rise in (Chinese) group trips.”

CHINESE TOURISTS RETURN WITH STRONG PURCHASING POWER

Before the COVID-19 pandemic, Chinese tourists still made up 34.8% of total visitors to Korea in 2019 despite the Chinese government’s restrictions on Chinese group tours to Korea in 2016 in retaliation for Seoul’s decision to deploy the US terminal high altitude area defense (THAAD) missile system on its soil.

Beijing lifted the group tour ban in August last year, but the resurgence of Chinese group tourists to Korea has been slow.    

Since the beginning of this year, however, the growth in Chinese group travelers to Korea has begun to pick up speed, suggesting Chinese group tourists' real return after a seven-year hiatus.

Industry observers said their return is partly credited to the weaker Korean currency against major currencies, including the US dollar and the Chinese yuan.

The stronger yuan against the Korean won means stronger purchasing power for Chinese tourists in Korea.

The yuan strengthened to an average of 188.52 won in April this year from 178.60 in July 2023, according to data from the Bank of Korea.

Bloomberg Intelligence recently projected that Korean duty-free stores would benefit from a boom in Chinese tours to Korea driven by the weakening Korean won value versus the Chinese yuan.

CLEAR SIGNS OF RECOVERY  

According to the Korean travel retail industry on Wednesday, several other tour groups from China are set to arrive in Korea starting this month.

According to the Incheon Metropolitan City government and Incheon Tourism Organization, the massive coastal city bordering the capital of Seoul will welcome about 10,000 foreign tourists, including 5,000 Chinese tourists, during the 1883 Incheon McGang (Chimaek) Party scheduled later in May.

In June, about 6,000 group tourists from China are booked at Inspire Entertainment Resort in Incheon.

Jeju Island, Korea’s most well-known resort destination, which allows Chinese to visit without a visa, is another popular destination for Chinese tourists.

Direct flights between China and Jeju Island will increase to 164 in July from 127 in March to meet growing demand from Chinese travelers.

Chinese group tourists have spent heavily not only at duty-free shops in Korea but also on various tourist spots like palaces and traditional markets.

During this year’s Chinese Labor Day holidays starting May 1, Chinese tourists’ Alipay and WeChat Pay transactions at major Hyundai Department Store branches in Seoul jumped 87.9% from the same period last year.

GROWING KOREAN VISITORS TO CHINA

Korean visitors to China also have been on the rise recently, boding well for Korean tourism companies as China is one of their key tourism markets.

According to Modetour Network Inc., Korean group trips to China in April jumped 26% from the previous month.

China ranked the third most popular country to visit among Korean travelers, following Southeast Asian countries and Japan.  

Hanatour Service Inc. also saw a 13% on-month rise in Korean group tours to China in April.

Of Korean tourism companies’ total international group trips, China accounts for nearly 30%.

Write to Sun A Lee at suna@hankyung.com

Sookyung Seo edited this article.