Korea
Tourism is considered a sector for economic growth in Korea. In 2019 tourism directly contributed to 2.5% of total GDP. Tourism-related businesses employed 275 619 people in 2019, which fell to 191 005 people in 2020, representing 0.7% of total employment. Travel exports represented 11.5% of total service exports in 2020, down from 20.1% in 2019.
Following a record high of 17.5 million international arrivals in 2019, tourism was hit hard from the very start of the pandemic. In 2020, arrivals to Korea fell by 86% to 2.5 million and decreased further in 2021 to less than 1 million. The decrease in visitor volumes was reflected in a sharp decline in international expenditure, down 50.9% to USD 10.2 billion in 2020 and USD 10.3 billion in 2021.
Domestic tourism is generally an important sector for Korea, contributing approximately two-thirds of total tourism expenditure pre-pandemic. In 2020, domestic tourists fell 45% to 88.5 million. Domestic tourism recovered slightly in 2021, returning to 43.8% of pre-pandemic levels.
Since August 2018, tourism has been the responsibility of the Ministry of Culture, Sports and Tourism (MCST) with two main directorates:
Tourism Policy Bureau, encompassing the Tourism Policy Division, Domestic Tourism Promotion Division, International Tourism Division and Tourism Service Enhancement Division.
Tourism Industry Policy Bureau, comprised of the Tourism Industry Policy Division, Convergence Tourism Industry Division and Tourism Development Division.
The Ministry works closely with the Korea Tourism Organisation, a publicly funded national tourism organisation. The Council for National Tourism Strategy, chaired by the Prime Minister, was established to co-ordinate matters between 13 relevant Ministries, including Foreign Affairs, Maritime Affairs, and the Forestry Agency, regarding the strategic planning and promotion of tourism.
Korea has maintained a whole-of-government approach to tackling COVID-19. The Prime Minister heads the Central Disaster and Safety Countermeasures Headquarters Meeting, which comprises MCST, other relevant ministries, the seventeen provinces and major cities. In addition, the Ministry of Culture, Sports and Tourism is in close co-operation with the Ministry of Health and Welfare, Korea Disease Control and Prevention Agency, Ministry of Foreign Affairs, and relevant authorities under the Korea Disease Control and Prevention Agency Task Force to monitor the influx of COVID-19 confirmed cases from overseas.
In 2021, the Tourism Promotion and Development Fund had a total expenditure of approximately KRW 1 500 billion, including subsidies for tourism industry promotion, tourism infrastructure and other projects to attract foreign tourists. In addition, KRW 1 350 billion in 2020 and KRW 1 400 billion in 2021 were allocated to support the tourism sector, including:
Provision of loans and redemption grace periods (KRW 2.8 billion).
Job retention support for tourism businesses and capacity building of tourism workers (KRW 710 billion).
COVID-19 response supplies and travel facilitation campaigns (KRW 153 billion).
In February 2022, a supplementary budget of around USD 3 million supported the salaries of 33 000 tourism employees.
Source: OECD, adapted from the Ministry of Culture, Sports and Tourism, 2022.
In light of the pandemic, the tourism sector in Korea continues to face a wide range of issues and challenges. Key challenges include: supporting the survival of tourism businesses and their workforce, strengthening the competitiveness of tourism SMEs and their workers in response to future tourism trends, increasing traveller confidence and managing the return of tourism safely.
The halt of international tourism presented an opportunity for the tourism sector to evaluate and identify how to use better and integrate new and innovative technologies and move towards a safe recovery. Korea announced its policy vision for 2022 in the Annual Plan titled “Preparing for the fast recovery of the tourism sector through safe travel”, which identifies strategies to support the safe resumption of tourism, increase the attractiveness of Korea as a global tourist destination, and establish the infrastructure for future tourism.
To respond to key challenges, the Plan includes initiatives to assist tourism businesses and the workforce through financial aid, job retention, support for tourism businesses, capacity building for tourism workers, tax reductions, and health and hygiene support.
Korea has launched measures to support innovation in the travel sector’s digital transformation by providing financial support in the form of vouchers to enhance the digital competency of tourism SMEs. This includes knowledge sharing with MSMEs and traditional travel operators to:
Harness the digital transformation through new business model development.
Provide ICT support and develop management skills, including human resources, tax, accounting, legal, and marketing.
Create digital capacity-building programmes to understand systems, processes, digital content creation and planning.
Provide practical application through theory and training practice.
To disperse pent-up demand for travel safely, Korea has harnessed a big data service platform that forecasts the degree of congestion of domestic tourist destinations to provide guidance on destination selection and reinforce safety protocols. Korea has also leveraged new and innovative technology to boost traveller confidence post-pandemic, maintain the interest of future travellers, and spur future demand for international tourism (see Box 1.10). Digital technology, such as the 'metaverse' platform and digital influencers, are being used to promote Korea as a safe destination.