Tourism Spending Suppressed by Martial Law Declines for the First Time Since COVID-19

Analysis of BC and Shinhan Card Transactions
Tourist Spending in December Totals 3.5578 Trillion KRW
Tourism Barely Recovered from COVID-19
Decline Returns After Four Years Due to Martial Law

December 13 last year, a quiet Myeongdong street in Jung-gu, Seoul. Photo by Jinhyung Kang

Domestic tourist spending decreased by about 8 billion KRW last December. This is the first time in four years since 2020, when COVID-19 was prevalent, that tourist spending in December, considered a peak season, has declined. Analysts suggest that the tourism industry was hit as consumer sentiment froze due to the sudden imposition of martial law.

On the 26th, the Korea Tourism Organization's big data analysis service, 'Korea Tourism Data Lab,' analyzed data from BC Card and Shinhan Card and found that domestic tourist spending last month totaled 3.5578 trillion KRW. This is 7.8 billion KRW less than the 3.5656 trillion KRW recorded in December of the previous year. It is the first time in four years since 2020 that domestic tourist spending has decreased in the same month. Tourist spending had shrunk to 2.0847 trillion KRW in 2020 due to the impact of COVID-19 but gradually recovered through 2021 (2.8638 trillion KRW) and 2022 (3.5318 trillion KRW).

In particular, the food and beverage industry took a direct hit. The amount spent by non-locals at general restaurants, beverage shops, pubs, and other tourist spots was 1.7191 trillion KRW in December last year. This is a decrease of 168.7 billion KRW (8.9%) from 1.8878 trillion KRW in the same month of the previous year. During the same period, land transportation industries such as railroads and express buses also declined from 100.2 billion KRW to 91 billion KRW, and air transportation decreased from 59 billion KRW to 55.8 billion KRW. Consumption of cultural services also fell by 7.9 billion KRW compared to the previous year, totaling 38.2 billion KRW.

The decline in tourist spending appears to be influenced by the December 3 martial law incident. Analysts say that consumer sentiment shrank due to the unstable political situation, causing the year-end demand to disappear. The Consumer Sentiment Index for December, announced by the Bank of Korea, was 88.2, significantly below the baseline of 100. The drop compared to the previous month (100.7) was also substantial. During the impeachment phase of former President Park Geun-hye, the index fell by 9.4 points over three months, but this time it dropped 12.3 points in just one month.

Not only domestic tourists but also the growth of foreign tourists is slowing down. Last month, the number of Chinese tourists visiting Korea decreased by 111,000 from the previous month to 262,000. Although the number of Chinese visitors to Korea increased by triple digits in the first half of this year, it has gradually declined in the second half. It is believed that advisories from some countries warning against traveling to Korea due to martial law have had an impact.

The government has decided to prepare measures to promote tourist spending. On the 10th, the Ministry of Culture, Sports and Tourism announced its main business promotion plan and stated that it would actively implement cultural tourism consumption support policies. Special support will be strengthened for small business owners and micro-enterprises, and a special loan program worth 50 billion KRW will be temporarily implemented until March for tourism operators who have suffered damage. To reduce the burden of tourism expenses, initiatives such as non-capital region accommodation discount coupons, support for workers' vacation expenses, and nationwide travel campaigns will be promoted.

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