Duty-Free Shop Visitors Recover to 10 Million After 2 Years... Foreign Visitors More Than Double Increase

Foreign Duty-Free Shop Visitors Up 121% YoY
Increased Tourist Expectations Due to China's Lockdown Lift

[Asia Economy Reporter Gu Eun-mo] As the number of foreign visitors more than doubled compared to the same period last year, domestic duty-free shop visitors are expected to recover to 10 million this year for the first time in two years. Furthermore, with China lifting its lockdown policy next month, allowing free entry and exit, the relatively slow recovery in duty-free shop sales is also expected to gain momentum.

According to the Korea Duty Free Shop Association on the 29th, as of November this year, the number of visitors to domestic duty-free shops was 9,565,255, an increase of 56.5% compared to the same period last year (6,112,219). Considering that the monthly visitors exceeded 1 million for two consecutive months recently, recovering 10 million visitors this year seems achievable.

Both domestic and foreign visitors increased, with the recovery among foreigners standing out. This year, foreign visitors numbered 1,302,925, a 121.3% increase compared to 588,657 in the same period last year. Since April 2020, when COVID-19 began in earnest, the monthly number of foreign visitors to domestic duty-free shops had remained below 100,000, but in June this year, visitors reached 110,730, recovering the 100,000 mark for the first time in 26 months. Since then, the number of visitors has steadily increased, surpassing 200,000 in October (221,678), and exceeding 230,000 last month.

As of November this year, domestic visitors also increased to 8,262,330, up 49.6% from 5,523,542 in the same period last year. The number of domestic visitors to duty-free shops had dropped sharply from over 1 million in February 2020 to around 300,000 in March 2020, remaining between 300,000 and 500,000 thereafter. However, from April this year, the number exceeded 700,000, marking a full recovery trend, and surpassed 950,000 last month. With the year-end peak season, it is expected that this month may see the monthly visitors exceed 1 million for the first time since COVID-19.

On the 22nd, when the number of daily users at Incheon Airport exceeded 120,000 for the first time since the COVID-19 pandemic, the duty-free area of Terminal 1 at Incheon Airport was crowded with travelers. / Yeongjongdo - Photo by Jinhyung Kang aymsdream@

However, the recovery in sales is relatively less distinct compared to the recovery in visitors. This year, domestic duty-free shop sales amounted to 16.4724 trillion KRW, a mere 0.1% increase compared to 16.4554 trillion KRW in the same period last year. Last month, sales from foreigners and domestic visitors were recorded at 1.301 trillion KRW and 149 billion KRW, respectively. Foreign sales had shown a three-month consecutive increase from 1.1168 trillion KRW in July to 1.7534 trillion KRW in October but appeared to stall slightly last month.

Despite the recovery in foreign visitors, sales have stagnated partly due to the slow recovery in demand from Chinese visitors, including 'ttaigong' (Chinese proxy buyers), who account for a large portion of foreign sales. China's lockdown policy continued until last month, and with the depreciation of the yuan, the duty-free industry has been unable to avoid profitability deterioration. Currently, the number of Chinese visitors to Korea is only about 4% of the 2019 level. While the average monthly number of Chinese visitors in 2019 was around 500,000, currently only about 18,000 visit Korea. The number of flights between Korea and China has also decreased from an average of 7,500 per month in 2019 to about 1,600 now.

However, with Chinese health authorities set to lift the highest-level COVID-19 restrictions from January 8 next year and transition to a 'With COVID' policy, the recovery of Chinese visitors and related sales is expected to become visible soon. Park Eun-jung, a researcher at Hana Securities, analyzed, "With cross-border travel fully enabled by policy after a three-year hiatus since 2020, barring any unforeseen events, the recovery of Chinese visitors to Korea next year is anticipated," adding, "Once the recovery of Chinese visitors is in full swing, benefits will be concentrated in the duty-free channel."

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