Tourism Industry: "Greater Damage Compared to Other Sectors Due to COVID-19"

Korea Tourism Organization, Pilot Analysis of Tourism Industry Trends Based on Real Data

On the 6th, as concerns over the spread of the novel coronavirus infection grow, foreign tourists wearing masks are watching the changing of the guard ceremony at Gyeongbokgung Palace in Jongno-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Heeyoon] It has been revealed that the tourism industry has suffered greater damage than other industries due to the prolonged COVID-19 pandemic.

The Korea Tourism Organization announced on the 20th that it conducted a comprehensive analysis of the number of employees, sales, credit ratings, and financial risk ratings of tourism businesses based on real data from private credit rating agencies (2016?2021) and the National Business Survey by Statistics Korea (2016?2019).

To improve the accuracy of the survey, the analysis targets were divided into 700,000 "Tourism Industry Special Classification Businesses" (Special), which reflect the characteristics of the domestic industry based on the International Tourism Standard Classification, and 25,000 tourism businesses under the Tourism Promotion Act (Promotion).

This classification was made to address the limitation that the narrowly defined tourism industry (Promotion) under the existing Tourism Promotion Act is insufficient to represent the entire tourism industry. The collected data includes approximately 700,000 cases for the tourism industry (Special) and about 25,000 cases for the tourism industry (Promotion).

As a result of the analysis, the share of total sales of tourism industry businesses (Special) compared to all industries steadily increased from 11.3% in 2016?2019 to 12.5%. However, it decreased to 11.5% in 2020 when COVID-19 spread.

Also, in 2020, the year-on-year total sales decline rate of tourism industry businesses was 8.0%, more than seven times higher than the overall industry decline rate of 1.1% during the same period.

Since 2016, the average sales of tourism industry businesses (approximately 13.6 billion to 22.8 billion KRW) have generally been higher than those of all industries (approximately 13.8 billion to 16.2 billion KRW), showing a continuous upward trend. In particular, the average sales in 2020 rose more sharply, which is interpreted not as growth in the tourism industry but as a result of more severe closures and suspensions of small businesses due to COVID-19 compared to other industries.

Regarding delinquency rates calculated based on business financial debts and overdue payments, as of 2020, the delinquency rates for tourism businesses were on an overall increasing trend from 2016 to 2020, averaging 9.3% for tourism industry (Special) businesses and 8.2% for tourism industry (Promotion) businesses.

In particular, the delinquency rate for individual business owners steadily increased from 7.9% in 2016 to 11.0% in 2020. The delinquency rate for small and medium-sized enterprises also rose significantly from 7.6% in 2016 to 11.1% in 2020, indicating the need to consider support measures for these groups.

Jung Sunhee, head of the Tourism Consulting Team at the Korea Tourism Organization, said, "As the COVID-19 pandemic intensified, the tourism industry suffered greater damage than other industries," adding, "We will actively analyze trends and diagnose crises based on real data from tourism businesses going forward."

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