Tourism Outlook: South Korea

Tourism Outlook: South Korea May 2012 2011 was a big year for Korean tourism, with international visitors totaling a record 9.8 million, a 11.3 per...
Author: Brett Payne
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Tourism Outlook: South Korea

May 2012

2011 was a big year for Korean tourism, with international visitors totaling a record 9.8 million, a 11.3 percent increase over 2010. This increase in tourism bodes well for 1 Korea and its goal of attracting 20 million international visitors a year by 2020. With 2010-2012 designated as ‘Visit Korea Year’, the Korea Tourism Organization (KTO) has been active in promoting Korea as a tourism destination through a range of campaigns. Last year’s ‘Korea, Be Inspired’ campaign highlighted contemporary culture and the beauty of Korea’s natural landscape. The ‘Korea Grand Sale’, which 2 kicked off in January of this year, was cited by CNN GO as one of the top reasons to visit Korea in 2012. Korea’s commitment to major events such as the 2010 G20 Seoul Summit, and 2010-2011 Formula One Korean Grand Prix, has significantly increased the number of foreign visitors. Expo 2012 Yeosu Korea, together with Korea’s popular culture and music scene, will only continue this trend. In 2011, Visa account holders spent more than $2 billion on their Visa cards while visiting Korea, an increase of 26 percent over the $1.7 billion spent the previous year, according to VisaVue®Travel data. Visitors from Japan, the United States and China represented the largest spenders by source market. I am very pleased to present the second Tourism Outlook: Korea that includes information on tourism spend in Korea in 2010 and 2011. As the world’s largest electronic payments network, Visa is in a unique position to examine actual Visa card spending data to aggregate information about visitors – where they are coming from, how much they are spending and what they are buying. Visa is a staunch supporter of the Korea tourism industry, and will continue to use market intelligence to help merchants, government and other stakeholders promote South Korea as one of the best tourism and shopping destinations in the world.

James Dixon Country Manager, Korea, Visa

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Korea Joongang Daily, “Tourism campaign kicks off,” 5 January 2010 CNN Go, “12 reasons to visit Korea in 2012,” 30 December, 2011. CNN Go is the Internet’s leading source of travel news, information and on the ground, insider insight for luxury, business and leisure travelers

Note: All currency in US dollars, unless stated otherwise

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Overview

The top ten markets visiting Korea spent about $1.8 billion last year, a respectable increase from the $1.4 billion spent by these same top markets in 2010. Spending by the top ten source markets represents 89 percent of the $2 billion spent by all international visitors to Korea last year, according to VisaVue®Travel data. Japan was again Korea’s leading tourism market, with Japanese visitors spending more than $800.5 million in 2011, 31.1 percent more than the previous year. Japanese visitors spent more than $436.9 million in the ‘Other travel 5 and entertainment’ category, which exceeded the total spent by visitors from the United States, Korea’s second biggest spending market.

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United States visitors spent $402.2 million, a rise of 10.9 percent compared to 2010. And China ranked as Korea’s third top international market, spending $149.4 million in 2011, an increase of 24.6 percent. Chinese visitors also increased their average spend by 9.3 percent, up from $149.37 in 2010 to $163.32 last year.

Includes buses, boat rentals, airport purchases, duty free purchases, home furnishings, catering, bars, casinos, golf courses, etc

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But the biggest rise in spending can be attributed to visitors from the Russian Federation, which leapt from eighth place in 2010 to become Korea’s fifth largest source market in 2011 in terms of international spend, ahead of Taiwan, Thailand and Singapore. Russian visitors increased spending by 60.3 percent to $68.9 million compared to the previous year. Russian visitors were also the group to increase their average spend the most, up 14.3 percent from $162.55 in 2010 to $185.79.

Visitors from Thailand also recorded strong growth in spending of 38.8 percent to $67.6 million, and Taiwanese visitors spent 24.5 percent more than in 2010, at $61.9 million. Visitors from Singapore and Hong Kong also increased spending by 28.3 percent to $57.8 million and 27.3 percent to $97.5 million, respectively. Visitors from the United Kingdom increased spending by a solid 14.6 percent to $41.3 million, while Canadian visitors increased spending a modest 1.8 percent to $38.4 million but fell overall to tenth place.

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Japan - Korea’s top tourism contributor

Japan remained Korea’s top tourism source market, with visitors contributing $800.5 million in spending in 2011, 31.1 percent more than the $610.6 million spent the year before. The average spend per transaction also rose, up 3.1 percent to $180.54. The number of Japanese transactions also grew strongly, up 27.1 percent. This supports Japanese outbound travel data that showed 3.2 million Japanese visited Korea in 2011, nine 6 percent more than the year before.

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The biggest merchant category for Japanese spending was ‘Other Travel and 7 Entertainment’ which attracted more than half of total spending, at $436.9 million, a 35.6 percent increase compared to 2010, which saw $322.1 million spent in the same category.

Japan National Tourism Organization, “Statistics of Japanese tourists travelling abroad,” 22 February 2012 Includes buses, boat rentals, airport purchases, duty free purchases, home furnishings, catering, bars, casinos, golf courses, etc.

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Shopping also appeared to be a favourite pastime with Japanese visitors last year. Spending in major retail categories all grew 8 strongly, with ‘Other Retail’ growing by 43.5 percent to $102.7 million, ‘Department stores’ spending growing 37.4 percent to $33.7 million and ‘Discount store’ spending growing by 45.1 percent to $6.5 million.

There was also strong Japanese spending growth in the ‘Healthcare’ category, which increased by 31.1 percent to $14 million. This could be attributed to the growing popularity of Korea as a medical tourism destination. According to KTO, Korea reportedly attracted 120,000 medical tourists in 2011, up from 9 82,000 in 2010.

‘Accommodation’ and ‘Restaurants’ both received a strong boost from Japanese spending during the year, up 18.9 percent to $100.1 million for ‘Accommodation’ while ‘Restaurant’ spending rose 26.8 percent to $26.5 million.

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Includes general merchandise, contractors, confection, bakeries, home supply, lumber, paint, garden supply, clothing, software, music, wine/liquor, antiques, bookstores, jewelry, toys, camera/photo supply, luggage/leather, glassware, cosmetics, newsstands, etc. USA Today, “Medical tourists flock to Seoul for cosmetic surgeries,” 27 December 2011

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Growth of Chinese visitors to Korea

Chinese travellers continue to embrace international travel, and Korea benefited in 2011. According to United Nations World Tourism Organisation data, Chinese tourists spent $54.9 billion overseas in 2010, making them the world’s third largest overseas spenders after Germans and Americans.

Chinese visitors also spent considerably more in ‘Restaurants’ last year, up 34.8 percent to $6.2 million. Spending in ‘Accommodation’ also rose by nearly a third (31.1 percent) to $25.3 million. Chinese spending in the ‘Healthcare’ merchant segment grew by nearly 50 percent (49 percent) last year, to $6.2 million. The average spend per transaction also rose solidly by 17.2 percent to $719.89. While the United States remains the number one market for medical tourism, particularly for cosmetic surgery, the increase in Chinese healthcare spending 10 supports the view that China is fast rising.

According to VisaVue®Travel data, China ranked as the third highest source market for visitors to Korea again in 2011 – like the previous year. However, 2011 recorded a 24.6 percent year on year growth in total Chinese spending. The average amount spent per transaction also grew, up 9.3 percent to $163.32 from $149.36 in 2010. The ‘Other travel and entertainment’ category was the largest category of Chinese spending overall, attracting $64 million, a 26.4 percent increase compared to 2010. 10

USA Today, “Medical tourists flock to Seoul for cosmetic surgeries,” 27 December 2011

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Russian visitors to Korea big spenders

Russian visitors to Korea recorded the strongest year on year growth in spending, up 60.3 percent to $68.9 million in 2011 compared to $43 million in 2010. The number of transactions also rose considerably by 40.3 percent, indicating Visa account holders were using their cards more often in Korea during the year. 11

Russian Visa account holders also increased their average transaction value by 14.3 percent, up to $185.79 from $162.55.

‘Remaining merchants’ and ‘Other travel and entertainment’ attracted solid growth in spending, $16.5 million (up 41.9 percent) and $14.5 million (up 50.9 percent), respectively.

‘Healthcare’ attracted the greatest Russian spending, totalling $16.6 million, an increase of 154.8 percent compared to the previous year.

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Includes railroads, marinas, ATMs, financial institutions, insurance, money transfers, etc

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The retail sector also fared well from Russian spending, with ‘Department stores’ recording 51 percent year on year growth to $6.1 million, while ‘Discount stores’ experienced 44.8 percent growth in Russian spending to $1.2 million.

Visiting Russians also spent more on ‘Accommodation’, up 20.3 percent to $5.8 million compared to 2010, yet the average transaction value spent on lodging fell marginally by 1.4 percent to $352.88.

Russians spent more in Korean ‘Supermarkets’ in 2011, an increase of 61.4 percent to $330,423, while ‘Restaurants’ received a 45.5 percent boost from Russian visitors in 2011, with restaurant spending up to $1.5 million.

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Merchant categories The top 15 merchant categories recorded mostly strong double-digit growth, reflecting international visitors’ spending contributions to the Korean economy. The number one category for spending was ‘Other travel and entertainment’ which attracted $717.1 million in spending, followed by ‘Accommodation’ which generated $339.2 million in spending, and ‘Remaining 12 merchants’ was third, attracting $283 million in spending. Greatest growth in the top 15 merchant categories came from spending in the ‘Healthcare’ category, which grew 46.2 percent to $72.2 million. This surge in spending shows that Korea’s strategy of attracting medical tourists, often for plastic surgery, is paying 13 dividends. Spending with ‘Travel agencies’ grew very strongly, up 42.3 percent to $11 million, while spending with ‘Airlines’ increased a modest 4.8 percent to $83.3 million. VisaVue®Travel data shows international visitors went shopping when they visited Korea, with retail spending recording solid growth during 2011. Spending in ‘Department stores’ grew by 28.5 percent to $88.6 million, ‘Other 14 retail’ spending grew 31.3 percent to $275.3 million, spending in ‘Discount stores’ grew 27.4 percent to $31.2 million, while spending in ‘Sporting goods stores’ grew 28.1 percent to $8.9 million.

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Includes railroads, marinas, ATMs, financial institutions, insurance, money transfers, etc USA Today, “Medical touirsts flock to Seoul for cosmetic surgeries,” 27 December 2011 Includes general merchandise, contractors, confection, bakeries, home supply, lumber, paint, garden supply, clothing, software, music, wine/liquor, antiques, bookstores, jewelry, toys, camera/photo supply, luggage/leather, glassware, cosmetics, newsstands, etc.

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Seasonal spend

The autumn months of October and November remain the most popular time for international travellers to visit Korea, according to VisaVue®Travel Data. Visitor spending peaked in November, with $213.4 million spent by Visa account holders, an increase of 26.6 percent compared to the previous November. In October, tourism receipts totalled $207.6 million, up 21.9 percent year on year.

The summer months of July, August and early autumn month of September experienced the greatest growth in visitor spending, all rising about 34 percent compared to the previous year.

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Spending during the winter months of December, January and February also grew solidly, with December recording a very solid 30.1 percent, while January and February saw spending grow by 16.3 percent and 13.1 percent respectively.

In July 2011 the International Olympic Committee announced that Pyeongchang, South Korea will host the 2018 Winter Olympics, putting Korea on the map for winter 16 sports enthusiasts.

Part of this growth can be attributed to Korea’s campaigns to attract visitors to Korea’s ski 15 fields.

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eGlobal Travel Media, “South Korea set to woo Aussie skiers this winter,” 30 September 2011 Wall Street Journal, “South Korea wins 2018 Olympic bid,” 7 July 2011

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Korea’s medical tourism – a cut above the rest

Korea’s state of the art medical facilities and competitive rates have been attracting medical tourists in droves since 2009. According to the head of Welfare Policy Division at Korea’s Ministry of Health and Welfare, Mr. Lim In-taek, Korea is targeting to service 300,000 17 medical tourists by 2015. The Ministry is focused on highly profitable patients, such as Americans. South Korea now has offices in New York and Los Angeles promoting medical tourism as well as a medical tourism board. The Council for Korea Medicine Overseas Promotion has developed medical tour packages for foreign visitors, where medical 18 tourists can get a visa issued within 24 hours.

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According to KTO, the largest and fastest growing sector in medical tourism is plastic 19 surgery. Last year, 32 percent of medical tourists were from the United States and according to VisaVue®Travel data, account holders from the United States spent $18.6 million on ‘healthcare’ in Korea in 2011, up 16.3 percent from $16 million in 2010. Other target markets for Korea’s medical tourism include Russia, Mongolia, Hong Kong and Vietnam.

The Christian Science Monitor, “South Korea’s boom in medical tourism,” 23 March 2011 International Medical Travel Journal, Jan 2012 USA Today, “Medical touirsts flock to Seoul for cosmetic surgeries,” 27 December 2011

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Every year the Korean government promotes 25 medical packages in major cities in China, Japan, the Middle East, and Russia. The government has also been actively participating in exhibitions and conferences related to medical tourism overseas in places like the United States, the Middle East, the Philippines, Singapore, the United Kingdom and Russia. Centres for one-stop services for medical tourism have also opened at Incheon International Airport, Incheon, and the headquarters of the Korea Tourism Organization. Ever since their opening, the service centres have received 9,000 visitors 21 per month.

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According to VisaVue®Travel data, Russian visitors to Korea spent $16.6 million on ‘healthcare’ during 2011, a massive 154.8 percent increase compared to $6.5 million in the previous year. The average transaction size was $895.68, a year on year increase of 6.8 percent. Hong Kong visitors spent $2 million on healthcare, according to VisaVue®Travel data, a 35.9 percent increase compared to the previous year. Visitors from Mongolia spent $1.4 million on healthcare in Korea during 2011, an increase of 171.5 percent, while Vietnamese visitors spent $378,300, an increase of 115.6 percent compared to the previous year.

Ministry of Health and Welfare, 2010

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About VisaVue®Travel Data Launched in 2009, VisaVue®Travel data is a service offered by Visa Inc. that provides government agencies, hotels, airlines and other organisations within the tourism industry unique insights into spending by international visitors. VisaVue®Travel data utilises aggregate international account holder spending on Visa debit, credit, commercial and prepaid cards to help the tourism industry to analyse tourism’s economic contribution and tailor marketing, promotional strategies and budgets based on up-to-date visiting spending information.

that delivers value to countries and businesses that rely on tourism revenues. As at December 31, 2010, Visa processed more than 71 billion transactions totaling more than US$3.3 trillion (payments volume, $5.2 trillion total volume), and it is clear that Visa payment cards and services help power the global economy and make payments faster, more convenient, more reliable and more secure. For more information regarding Visa’s partnership with the tourism industry and VisaVue® spending data referenced, contact [email protected].

The report features: • Analysis of tourism spending based on country of origin • A detailed overview of tourism spending across thousands of merchant categories Visa is a valuable partner for the tourism industry, providing tools and resources that offer insight into how best to attract international visitors and strengthen a country’s tourism competitiveness. With a network that connects more than 2.3 billion Visa account holders (includes Visa Europe account holders) and the people who carry them with tens of millions of merchant outlets and 1.9 million ATMs around the world, Visa is in a unique position to foster better understanding of travelers mindsets and where and how they spend their money when traveling abroad. With VisaVue®Travel data, Visa turns transaction data into actionable information

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Travelling with Visa Visa account holders benefit from secure, convenient and reliable access to their funds, with the ability to use digital currency at tens of millions of merchant locations and 1.9 million ATMs in more than 200 countries and territories. Carrying a Visa card is safer than carrying cash – if a Visa card is lost or stolen, it can easily be blocked and replaced, unlike cash, which is gone forever.



calculated automatically at a competitive rate and deducted from your account in the usual way. In addition, items purchased with Visa Platinum and Visa Infinite cards are covered by purchase protection insurance

• Visa cards are a global currency, so it does not matter if you have a chip-based or a magnetic stripe-only card – you can use it anywhere. If you have a Visa chip card, you may be asked to provide a signature instead of a PIN by a merchant abroad

Top Tips for Using Cards Abroad Before leaving:

• Occasionally in countries where transactions normally involve a PIN, magnetic stripe account holders may be asked for a PIN rather than a signature, so make sure you know the PIN for any card you plan to use while travelling. You can always reapply for a new PIN from your bank if you have lost it

• Check the expiration date on your Visa card • Tell your bank you will be using your card abroad • Photocopy your card and passport, but keep the photocopies separate

• In some countries, some merchants offer to make a currency conversion at point-of- sale – only do this if you are sure it offers a good deal

• Check with the bank that issued your Visa card to see if it offers any extra benefits such as travel insurance or a money-back guarantee if something goes wrong with a purchase

• Try not to keep cards and cash in the same place - that way there’s less chance of losing everything if something does happen

• Note down the number of Visa’s Global Customer Assistance Service (GCAS), a global support network for account holders that is available 24 hours a day, seven days a week, every day of the year. Account holders can call GCAS free from anywhere in the world, using one of 550 telephone numbers

• Withdrawing cash in another country is exactly the same as it is at home – you use the same card and PIN but the machine will dispense local currency. If you want to take out money abroad for taxis or tipping, you can locate the nearest ATM by using the ATM locator available on www.visa.com

When abroad:

• Report a lost or stolen card to your bank immediately to stop all card transactions

• When you pay with your Visa card, check the information on the terminal or sales voucher before you sign or enter your PIN • There is no need to worry about complicated currency conversions because the amount is

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Tourism Outlook: South Korea