'Accommodation Discount Coupons' Intended to Support Tourism Industry... Cracks Emerge Even Before Launch

[Asia Economy Reporter Kim Heung-soon] The government's 'National Accommodation Discount Coupon Support Project,' launched to support the tourism industry facing a crisis due to the prolonged COVID-19 pandemic, has encountered complaints from related industries even before its implementation scheduled for the 14th.

This project provides discount coupons worth 30,000 to 40,000 KRW to the first one million people who book domestic accommodations. The government covers two-thirds of the discount amount, while online travel agencies (OTAs) and accommodation facilities share the remaining cost. According to industry sources on the 11th, some participating companies, including OTAs, are complaining that "the self-funded amount is greater than the revenue earned from accommodation sales commissions, resulting in losses the more they sell."

The National Accommodation Discount Coupon Support Project allows individuals to receive one discount coupon per person on a first-come, first-served basis through a total of 27 OTAs selected via public recruitment. The total issuance is one million coupons. There are 200,000 coupons worth 30,000 KRW for accommodations priced at 70,000 KRW or less, and 800,000 coupons worth 40,000 KRW for accommodations priced above 70,000 KRW.

The coupons apply discounts at registered and reported domestic accommodations such as hotels, condos, resorts, pensions, rural homestays, and motels. The stay period is set from September 1 to the end of October, considering the activation of the off-peak domestic tourism market.

For the 30,000 KRW discount coupons, the government budget supports 20,000 KRW, and OTAs and accommodation facilities share 10,000 KRW as self-funding. Applying this ratio to the 40,000 KRW discount coupons, the government budget covers about 27,000 KRW, and the participating companies bear about 13,000 KRW. The government budget allocated for providing these discount coupons is approximately 28 billion KRW.

OTAs reportedly receive a commission of about 10% per booking. For example, when a consumer books a 70,000 KRW accommodation through an OTA, the OTA earns a 7,000 KRW commission. However, when participating in the accommodation discount coupon project, OTAs must pay 10,000 KRW as self-funding, resulting in a loss of 3,000 KRW, according to industry complaints.

The Ministry of Culture, Sports and Tourism and the Korea Tourism Organization explained, "The self-funded amount can be shared equally between OTAs and accommodation facilities through mutual agreement." However, since accommodation facilities already pay costs such as commissions and promotional fees to OTAs for booking services, it is highly likely that OTAs will bear the entire self-funded amount in practice.

Because of this, relatively lesser-known and smaller OTAs are reportedly more dissatisfied with the self-funded amount. An industry insider said, "There is a risk of concentration on OTAs with a large number of users, so most businesses participating in the support project are willing to bear the self-funded cost," adding, "It is regrettable that the self-funded amount was uniformly set regardless of the size of the company." The Ministry of Culture, Sports and Tourism explained, "The self-funded amount was set with the intention of maximizing the effect of creating tourism demand by increasing the discount rate provided to the public and encouraging industry-wide participation."

This content was produced with the assistance of AI translation services.