Tourism in the Economy Tourism Organisation and Governance

II. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – KOREA

Korea

Tourism in the economy In 2012, Korean tourism achieved strong growth, registering a record 11.1 million international arrivals, a 13.7% increase over 2011, while outbound travel grew by 8.2% to 13.7 million departures. The five leading origin markets in terms of the number of visitors to Korea were Japan (3.5 million), China (2.8 million), the United States, Chinese Taipei, and Thailand. Korean tourism contributed an estimated 5.9% of total national GDP in 2012 and accounted for 6.4% of total employment (WTTC). Tourism expenditure for the year was USD 16.5 billion, a 6.3% increase over the previous year, while tourism receipts amounted to USD 13.4 billion, an increase of 8.5%. Significantly, the balance of payment deficit decreased annually from USD 3.9 billion in 2010 to USD 3.0 billion in 2012.

Tourism organisation and governance In February 2013, following the election of the country’s new government, some important changes impacting the governance and organisation of the administrative office were introduced. One important change is the Ministry of Culture, Sports and Tourism (MCST)’s new Digital Content Industry Division. Other initiatives aimed to heighten efficiencies inside the MCST have also been introduced (Figure 1): ● The Tourism Bureau encompasses the Tourism Policy Division, Tourism Industry Division and International Tourism Division. ● The Tourism and Leisure Planning Sub-Bureau comprises the Tourism Development Planning Division, the Tourism Development Support Division, and the Tourism and Leisure Infrastructure Division. Additional organisations supporting tourism are: ● The Korea Tourism Organization (KTO) is responsible for international and domestic tourism promotion. Recent initiatives by KTO have focused on the development of tourism technology as a means of further promoting and enhancing the reach of Korean pop culture (the Korean wave or Hallyu) to further enhance the country’s tourism industry. ● The Korean Culture and Tourism Institute (KCTI) conducts research activities in parallel with the initiatives of the MCST. In July 2013, the MCST announced a new policy aimed at enhancing international co-operation in the field of tourism, which described ten major tasks including strengthening research functions in international tourism co-operation. In line with this new initiative, the KCTI established the International Tourism Research Centre under the Tourism Policy Research Division.

228 OECD TOURISM TRENDS AND POLICIES 2014 © OECD 2014 II. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – KOREA

Figure 1. Korea: Organisational chart of tourism bodies

Ministry of Culture, Sports and Tourism

Tourism Bureau Korea Tourism Organization (KTO) Local Government (Tourism)

Korea Culture and Tourism Various Tourism Industry Tourism Policy Division Institute (KCTI) Organizations

Tourism Industry Division

Tourism Promotion Team

International Tourism Tourism Development Division Planning Division

Tourism and Leisure Tourism Development Planning Sub-Bureau Support Division

Tourism and Leisure Infrastructure Division

Source: OECD, adapted from the Ministry of Culture, Sports and Tourism, 2014.

● A variety of organisations, including the Korea Tourism Association (KTA), Korea Association of Travel Agents (KATA), Korea MICE Association (KMA), Korean Association of Professional Congress Organizers (KAPCO) and Korea Tourist Guides Association (KOTGA), work closely with the MCST to support the many benefits – economic, social, cultural, etc. – associated with tourism development as a whole.

Tourism budgets In 2012, a total of USD 2.54 million (general account) was allocated to support the development and assessment of tourism resources, co-operation in international tourism, official development assistance (ODA) in tourism, and the establishment of tourism and leisure cities. Tourism promotion and development funding included USD 644 million allocated across the following areas: medical tourism and MICE industries; tourist information centres and reporting centre management; overseas promotion for Korean tourism; tourism market research; and overseas marketing. An allocation of USD 371 million (special account) was made for infrastructure development. This included the construction of a tourism cluster on the southern coast of Korea and development in the eastern coastal belt to support the construction of access roads to specially designated tourism and leisure enterprise cities.

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Tourism-related policies and programmes In July 2013, in acknowledgement of the importance of the tourism industry’s contribution to the economy, the MCST introduced a set of initiatives and policy reforms to achieve its target of attracting 16 million international visitors to Korea annually, creating 60 000 new jobs by 2017. Initiatives to further boost Korean tourism are as follows: ● Increased visa facilitation: To boost visitor arrivals, Korea will increase the number of multiple-entry visas it issues to Chinese nationals resident in Beijing and Shanghai municipalities, and to students at specified Chinese universities. In addition, Southeast Asian tourists from selected countries who have previously visited South Korea without any illegal overstay, will be granted a one-year, multiple-entry visa on arrival. ● Replacement holiday plan: To encourage greater domestic travel, the new initiative will provide an additional day off to workers when a public holiday fall on a weekend. Scheduled to commence in January 2014, the periods affected will include Thanksgiving (Chuseok), Lunar New Years and Children’s Day. Under the new system, workers are expected to receive an average of 1.1 additional vacation days per year. ● Hotel Tax Refund Program: Commencing in 2014, foreign visitors who pay hotel charges themselves will be reimbursed for the 10% value-added tax charged to room stays. Canada adopted a similar scheme from 1992 through 2006 and, as a result, the nation benefited from an average 5.8 % rise in tourism revenues annually. Although the programme will result in tax losses of some USD 46 million per annum, the MCST believes it will generate an additional USD 279 million for the economy. ● Meetings, incentives, conventions and exhibitions/events (MICE): Since 2008, the Korean government has invested heavily to increase its competitiveness in the MICE Industry. A total of 563 international meetings were hosted in 2012, making it the fifth most visited destination in the world for international association events, according to the Union of International Associations (UIA). To support further advances in these sectors, the government will allocate additional financial and administrative resources to enhance the MICE industry. ● Medical tourism: The number of international visitors travelling to Korea for medical- related reasons is on the increase. Key markets for this sector include Japan, China, the Russian Federation and the United States. International patients have more than doubled in recent years, with major hospitals reporting a total of 122 297 patients in 2011 – up from 60 201 patients in 2009. Estimates for this year point to as many as 200 000 international patients being treated in Korea. The MCTS, in co-operation with the Ministry of Health and Welfare, has been actively engaged in developing the infrastructure and mechanisms to promote medical tourism by supporting measures which include the establishment of medical tourism clusters in Daegu and Osong, the opening of one-stop service centres for medical tourism, developing measures to reduce waiting times for people applying for medical visas, and revising laws and regulations governing the practices of agencies or brokers involved in medical tourism. ● More berths committed to cruise ships at the major seaports and on-board casino services: In 2012, 23 cruise ships from 16 companies, including Royal Caribbean Cruises and Costa Cruises, visited Korean ports 379 times, bringing 282 400 international tourists (up from 153 300 in 2011) – mostly Chinese to Incheon, Busan, Yeosu, Jeju and other Korean

230 OECD TOURISM TRENDS AND POLICIES 2014 © OECD 2014 II. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – KOREA

seaports. The Korean government plans to build eight more berths capable of handling ships weighing more than 100 000 tons in Incheon, Busan, Yeosu and Jeju, to construct duty free shops, shopping and leisure facilities nearby, and to allow foreigner-only casinos on cruise ships owned by local companies. According to the Ministry of Oceans and Fisheries, if all these measures are put in place, more than 2 million foreigners are expected to visit the country on board cruise ships in 2020, generating economic outputs valued at USD 4.6 billion, and generating 30 000 jobs. ● National Police Agency – Tourism Liaison Officer Program: According to the Korea Tourism Organization, the number of complaints from visitors travelling to Korea jumped from 468 in 2009 to 897 in 2012. In order to address this issue, commencing in October 2013, the MCST will dispatch police officers with foreign language proficiency from the National Police Agency to areas frequented by tourists – such as Dongdaemun, Insadong, Itaewon, Namdaemun market and airports – to oversee security and prevent foreign tourists being overcharged by taxi drivers and merchants. The MCST closely works with the Ministry of Land, Infrastructure and Transport and its affiliated organisations, such as the Korea Transport Institute and the Korea Aviation Promotion Association, to support the sharing of knowledge and capabilities to further increase tourist arrivals and to boost revenue enhancement generators at the nation’s regional airports. From 2010 to 2012, Korea recorded one of the highest air traffic growth rates in Asia – averaging nearly 12% annually for international air passenger arrivals. Incheon International Airport has developed into one of Northeast Asia’s largest hub airports. The government has negotiated bilateral and multilateral agreements according to the principles of open skies. As of December 2012, the Korean government had signed air services agreements (ASAs) with 93 countries and concluded open skies agreements with 27 countries for the deregulation of passenger traffic. The MCST is actively supporting the implementation of the 10-Year Framework of Programmes (10YFP) on Sustainable Consumption and Production, which was adopted by the heads of states at the Rio+20 conference. In 2009, the MCST outlined the guidelines for the development of low-carbon green tourism resources, established action plans to transform the Jungmun Resort into a green tourism complex, and introduced special programmes to manage eco-tourism resources, such as wetlands, breeding sites for migratory birds, the Demilitarized Zone (DMZ) and its adjacent areas. By the end of 2013, the MCST was planning to introduce the “Eco-tourism Activation Masterplan” and the “Eco-tourism Certificate” to encourage tourism stakeholders to implement environment-friendly practices.

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Statistical profile Table 1. Korea: Domestic tourism

Unit 2008 2009 2010 2011 2012 Total domestic trips Thousand 267 009 268 647 263 633 201 976 244 102 Overnight visitors (tourists) ...... Same-day visitors (excursionists) ...... Trips by main purpose of visit Business and professional ...... Holiday, leisure and recreation ...... Nights in all means of accommodation ...... Hotels and similar establishments ...... Other collective establishments ...... Domestic travel receipts ......

Source: Ministry of Culture, Sports and Tourism, Domestic Visitor Survey, 2008-12. 1 2 http://dx.doi.org/10.1787/888932987955

Table 2. Korea: Inbound tourism

Unit 2008 2009 2010 2011 2012 Total international arrivals Thousand 6 891 7 818 8 798 9 795 11 140 Overnight visitors (tourists) ...... Same-day visitors (excursionists) ...... Top markets Japan Thousand 2 378 3 053 3 023 3 289 3 519 China Thousand 1 168 1 342 1 875 2 220 2 837 United States Thousand 610 611 653 662 698 Chinese Taipei Thousand 320 381 406 428 548 Thailand Thousand 161 191 261 309 387 Nights in all means of accommodation ...... Hotels and similar establishments ...... Other collective establishments ...... Total international receipts ...... International travel receipts Million USD 9 719 9 782 10 321 12 397 13 448 International passenger transport receipts ......

Source: Korea Tourism Organization, Korea Tourism Statistics, 2008-12.

1 2 http://dx.doi.org/10.1787/888932987974

Table 3. Korea: Outbound tourism

Unit 2008 2009 2010 2011 2012 Total international departures Thousand 11 996 9 494 12 488 12 694 13 737 Overnight visitors (tourists) ...... Same-day visitors (excursionists) ...... Total international expenditure Million USD 14 581 11 040 14 292 15 544 16 519 International travel expenditure ...... International passenger transport expenditure ......

Source: Korea Tourism Organization, Korea Tourism Statistics, 2008-12.

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232 OECD TOURISM TRENDS AND POLICIES 2014 © OECD 2014 II. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – KOREA

Table 4. Korea: Enterprises in tourism Number of establishments

2008 2009 2010 2011 2012 Total tourism enterprises 11 979 12 755 14 281 16 144 .. Tourism industries ...... Accommodation services for visitors 758 844 896 920 .. Hotels and similar establishments ...... Food and beverage serving industry1 2 067 2 507 3 126 3 415 .. Passenger transport ...... Air passenger transport ...... Railways passenger transport ...... Road passenger transport ...... Water passenger transport ...... Passenger transport supporting services ...... Transport equipment rental ...... Travel agencies and other reservation services industry2 8 499 8 569 9 284 10 725 .. Cultural industry ...... Sports and recreation industry3 418 527 612 686 .. Retail trade of country-specific tourism characteristic goods ...... Other country-specific tourism industries4 237 308 363 398 .. Other industries ......

1. Includes restaurants which provide entertainment, other restaurants, city tour services, tour photo services and transport terminal services. 2. Travel agencies. 3. Includes casino services, entertainment facility services and professional resort services, excursion boat and cruise services, art performance services, souvenir shop exclusives for foreign tourists. 4. Convention services. Source: Ministry of Culture, Sports and Tourism, Census on Basic Characteristics of Tourism Establishments, 2008-11.

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OECD TOURISM TRENDS AND POLICIES 2014 © OECD 2014 233 II. COUNTRY PROFILES: TOURISM TRENDS AND POLICIES – KOREA

Table 5. Korea: Employment in tourism Number of employees

2008 2009 2010 2011 2012 Total tourism employment (direct) 167 174 168 940 186 395 204 579 .. Tourism industries ...... Accommodation services for visitors 53 385 56 530 60 402 62 783 .. Hotels and similar establishments ...... Food and beverage serving industry1 26 825 30 951 36 725 39 715 .. Passenger transport ...... Air passenger transport ...... Railways passenger transport ...... Road passenger transport ...... Water passenger transport ...... Passenger transport supporting services ...... Transport equipment rental ...... Travel agencies and other reservation services industry2 54 661 46 989 49 928 59 287 .. Cultural industry ...... Sports and recreation industry3 24 593 25 733 28 321 30 156 .. Retail trade of country-specific tourism characteristic goods ...... Other country-specific tourism industries4 7 710 8 737 11 018 12 638 .. Other industries ...... Gender breakdown Male (% of total tourism employment) ...... Female (% of total tourism employment) ......

Note: Full-time equivalent. 1. Includes restaurants which provide entertainment, other restaurants, city tour services, tour photo services and transport terminal services. 2. Travel agencies. 3. Includes casino services, entertainment facility services and professional resort services, excursion boat and cruise services, art performance services, souvenir shop exclusives for foreign tourists. 4. Convention services. Source: Ministry of Culture, Sports and Tourism, Census on Basic Characteristics of Tourism Establishments, 2011.

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Table 6. Korea: Key economic indicators Percentage

2008 2009 2010 2011 2012 Tourism GDP (direct) as % of total GDP 2.0 2.1 1.9 1.9 2.0 Total tourism employment (direct) as % of total employment 2.3 2.4 2.2 2.3 2.4

Source: World Travel and Tourism Council (WTTC), Travel and Tourism Economic Impact 2013.

1 2 http://dx.doi.org/10.1787/888932988050

For more information

Ministry of Culture, Sports and Tourism www.mcst.go.kr Korea Tourism Organization http://visitkorea.or.kr/ Korea Culture and Tourism Institute www.kcti.re.kr Korea National Statistical Office http://kostat.go.kr/ K-MICE Information System www.k-mice.visitkorea.or.kr Korea Tourism Statistics System www.tour.go.kr

Access the complete publication at: https://doi.org/10.1787/tour-2014-en

Please cite this chapter as:

OECD (2014), “Korea”, in OECD Tourism Trends and Policies 2014, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/tour-2014-26-en

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