South Korea’s tourism industry finds itself facing an unexpected challenge: a sharp decline in bookings that has left travel agencies and airlines scrambling to fill seats. (Image courtesy of Yonhap)
SEOUL, Jul. 22 (Korea Bizwire) – As the peak summer travel season approaches, South Korea’s tourism industry finds itself facing an unexpected challenge: a sharp decline in bookings that has left travel agencies and airlines scrambling to fill seats.
“I’m being called into the CEO’s office every day because peak season reservations aren’t coming in,” confided an executive from one of South Korea’s largest travel agencies, speaking on condition of anonymity due to the sensitivity of the matter.
This revelation comes as a shock to many in the industry who had anticipated a continuation of the post-pandemic “revenge travel” boom that saw a surge in international trips following the lifting of COVID-19 restrictions.
Travel agencies had prepared for a robust summer, securing large blocks of airline seats and even chartering entire planes. However, demand has fallen well short of expectations, particularly for popular short and medium-haul destinations like Vietnam, Thailand, and Japan. Some reports suggest bookings for Japanese travel packages have dropped by 20% compared to last year.
The industry term for these pre-purchased airline seats is “hard blocks,” and they represent a significant financial risk for travel agencies. If unsold, the agencies bear the full cost of these seats. “If we can’t fill these seats, the losses fall entirely on us,” explained a representative from another major travel agency.
The situation has become so dire that travel agencies are resorting to deep discounts, offering Southeast Asian packages at prices that approach dumping levels, even during what should be the peak season.
Airlines are not immune to this downturn. One airline employee, speaking anonymously, noted that demand had plummeted just as the summer season was beginning.
“The high exchange rate and thinning wallets seem to have hit the tourism industry hard,” they said, adding, “Without an economic upturn, it’s hard to see this situation improving significantly.”
The situation has become so dire that travel agencies are resorting to deep discounts. (Image courtesy of Yonhap)
This slump has led to the unusual sight of airlines and travel companies offering discounts during what is traditionally the busiest and most profitable time of the year. Many had expanded their capacity to match 2019 pre-pandemic levels, but demand has fallen far short of these projections.
One resort distributor reported selling only 60% of their summer peak season target. An industry expert commented, “The travel and airline industries expanded their capacity to 2019 levels, but demand isn’t meeting those expectations. We’re worried that the post-COVID revenge travel boom might be tapering off.”
The concerns extend beyond the summer season. The industry is particularly apprehensive about the fourth quarter, as the Chuseok holiday falls in September this year, potentially leaving a gap in autumn travel demand.
“It’s possible that many people traveled earlier in the year, leading to this summer slump,” suggested a resort distribution company representative. “Regardless, it’s clear that the travel frenzy we’ve seen recently has cooled off significantly.”
Lina Jang (linajang@koreabizwire.com)
