SOUTH KOREA. Chinese visitor arrivals to South Korea were down -41.5% year-on-year in February to 345,341, a +33% share of total visitors.
It is an improvement on the -46.0% year-on-year drop in January, but worse than the -37.9% decrease recorded in December. The Korea Tourism Organization’s (KTO) latest figures show that the Chinese business is yet to recover from the political impact of the THAAD anti-missile system controversy between China and South Korea last year.
As reported, Lotte Duty Free this week welcomed news that China might soon lift economic restrictions on Korean firms that were imposed after the dispute began in March 2017, but warned against any premature optimism.
The company partly blamed the dispute for a shocking -99.25% collapse in 2017 operating profits to just KRW2.5 billion (US$2.38 million).
It also blamed sky-high concession fees at Incheon International Airport. The company failed to renegotiate its terms with Incheon International Airport Corporation (IIAC) and has quit most of its T1 contracts, which are being rebid.
Lotte, like The Shilla Duty Free, Shinsegae Duty Free and several small & medium enterprise retailers, had been locked in a dispute with IIAC over fairly reducing concession fees in the wake of the T2 opening in January, which has led to a drop in passenger numbers in T1.
As reported, Shilla yesterday (3 April) surprised the Korean travel retail trade by agreeing to cut concession fees for its duty free contract in T1 by -27.9%. Most observers believe that Shinsegae will now likely follow suit.
Japanese visitor arrivals to South Korea in February fell -9.1% to 168,241, a 16.1% share. The disappointing result follows growth of +7.9% in January.
Visitor departures by South Korean nationals were up +3.6% to 2,231,269, following a +22.4% surge in January.
South Korean travel retail is overwhelmingly reliant on those three nationalities, and the latest KTO figures and recent developments at the country’s major retailers continue to provide food for thought.